With choice S1, a manager sees gains of $10 million and $6 million.With choice S2, a manager sees gains of $12 million and $8 million.Only a pessimistic manager would choose S1.

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Quizplus · Accepted Answer

This statement is not necessarily true. A manager could choose S1 if they prioritize a smaller potential loss over a larger potential gain or if they believe that there is a higher chance of achieving the gains associated with S1. Therefore, a manager's decision cannot be solely based on optimism or pessimism.

With Choice S1, a Manager Sees Gains of $10 Million