BUAD 304 – 14723 TA: Tolan Natural Disasters and the decisions that follow 1. I think that Rommel’s quote reveals bounded rationality. He cancelled 40,000 people’s insurance policies all on the basis of that 2004 hurricane season. That season was Florida’s worst hurricane season in history and for Rommel to just cancel that many people’s policies is outrageous. I think that this is bounded rationality because canceling the insurance policies was probably the easy way out. There had to have been a more complex solution but Rommel didn’t want to go that way and instead constructed a simplified model of the situation. This simple model was most likely canceling the policies. If a solution was looked at more thoroughly many of these policies would have probably not been canceled. 2. Overconfidence bias was definitely a problem with the airlines because the snowstorms were predicted and JetBlue thought they could get all of their planes in the air. However they were too confident in this and as a result, the snowstorm became worse
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This note was uploaded on 02/15/2011 for the course BUAD 304 at USC.