Given the opportunity, a rational decision-maker should always select the alternative with the:
A) greatest expected return regardless of risk.
B) lowest expected return regardless of risk.
C) greatest expected utility.
D) lowest probability of occurrence.
E) greatest marginal utility.

Question

Quizplus · Accepted Answer

The rational decision-maker should select the alternative with the greatest expected utility, which takes into account both the expected return and the level of risk involved. Risk is a crucial factor in decision-making, and it cannot be ignored, as it can have a significant impact on the outcome. So, a rational decision-maker should consider the level of risk they are willing to take and choose the alternative that offers them the highest expected utility.

Given the Opportunity, a Rational Decision-Maker Should Always Select the Alternative