Which of the following statement is FALSE about the expected value approach to make decisions under risk?
A)It assumes that the decision maker is rational and will choose the optimum decision with the highest expected value.
B)It ignores the elements other than monetary profits.
C)It takes irrational factors into consideration.
D)It ignores factors such as quality of life or the current monetary status of the decision maker.

Question

Quizplus · Accepted Answer

The expected value approach assumes the decision maker is rational and considers all options with the highest expected value. It only takes into account monetary profits and ignores other factors such as quality of life or current monetary status. Thus, statement C is false as the expected value approach does not consider irrational factors.

Which of the Following Statement Is FALSE About the Expected