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notes march 3rd - tournmament o Or might only analyze the I...

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3/3/10 comm402 CHAPTER 4 Choice o First of the “basic models” of human behavior o Applies to anything you can construe as an individuals choice Decision, outcome uncertain Value Probablitity Theorized rational choice process being modeled o Examine all possible plans o Identify all possible outcomes o Value each outcome o Estimate probability of each outcome o Choose outcome with highest expected value (value X probability) Probability o Otol decimals or percentages o Avoid reasoning error of assuming that all outcomes are equally likely Lottery: 2 outcomes, 50/50% chance of winning o Gamblers fallacy” being “due” for a red card, etc. ∑=sum Expected value value X probability Nice to have a common metric, like $ for value EV= ∑PiVi (for I possible outcomes) o Might analyze all possible outcomes to get total pay off, asin the total ____ for a golf
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Unformatted text preview: tournmament o Or might only analyze the I pay offs if you take job #2 of 4 choices • Decision tress merely graphical aid to seeing which outcome has maximum EV o Draw otuu the whole tree, including all the contingent branches o Start collapsing to the left, until you end with only the branches reprepseting first choice o Largetst EV predicts first choice • Continue the process o Given the first choice collapse back to the next decision (i.e second choice) • Alternatively, can just multiply probabilities along each branch and list the product at the end of the final branch point o If a thing can happen N ways add up all N probabilities to estimate its likelyhood o Equal finality in GST—can get same place in different ways...
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