Which of the following describes normative models?
A) These models are based on anomalies in rational decision making.
B) They are models in which the chosen alternative is demonstrably the best of all possible alternatives.
C) They are models based on the phenomenon of preference reversal.
D) They lead to an approach known as suboptimization.

Question

Quizplus · Accepted Answer

Normative models are models that prescribe the best course of action based on certain criteria or objectives. They are often used in decision-making contexts where the decision requires the identification of the best alternative among a set of options. Normative models aim to identify the option that is demonstrably the best of all possible alternatives. Therefore, option B is the correct answer. Option A is incorrect because anomalies in rational decision-making are the basis of descriptive models. Option C is incorrect because preference reversal is a phenomenon that occurs in decision-making, but it is not the basis of normative models. Option D is incorrect because suboptimization is an approach that seeks to optimize a particular goal or objective but may not lead to the best overall outcome.

Which of the Following Describes Normative Models