Problem 1.1 Gi ve an exampl e of a good deci si on that you made i n t he face of some uncert luck y o r unluck y? Can yo u gi ve an exampl e of a po or ly made decision wh ose o nswer! " was face with the de cisi on of accep ting a #ob as a data a nalys t or waitin g to s a training coordinator. " made the decision to turn down the #ob not knowing if " did this because " knew if " got the #ob as a training coordinator " would have could attend g raduate schoo l. " also knew who " could b e reporti ng to& and th e attitude to me. 'he weights were in favor of the #o b as the training coor dinator the position would open up. 'he outcome was lucky a nd " got that #o b& so " now g ot to attend gr aduate sch poorl y made decision wit h a luck y outcome was t he deci si on to buy my text very poor ratings& bu t low prices. " ran the ri sk of not getting my books on time becasue everything turned out all right in my case.
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"n the )ice *niversity football example& what are some of the issues that you wouldare the alternative courses of action? What issues invove uncertainty& and how couluncertainty? What are the alternative courses of action? What are the values held bdecisions make tradeo$s amoung these values?
,ome of the issues that " would consider is the reaction the students and other grouchange& price change& or uality change to the program. 'here are di$erent measurelead to a di$erent outcome.
'he alternatives to droping down to division """ is an increase in ticket prices. 'he unicould also do fundraising& this way those who value the football program the most a
'he biggest issue of uncertainty is the reaction of the students and fans. 'hey couldthe program further. 'hey could also shake it o$ like it is not a big deal. 'o manage tsurvey students& fans& and alumni alike.
s mentioned before& " would go with a course of action of raising the ticket cost an
not every student. "f the demand for football games is relativly inelstic& thy could ret
,ome groups think that football is very iportant to the schools reputation and their uuniversity& while others more than likly care little to none when it comes to this& thetheir tution higher.
-inally the biggest trade o$ will be the reputation and utility& for a more protable pr
"f the school raises the ticket prices the trade o$ will be the sum of the increased salthe fans. ,o the school will get a higher producer surplus& bringing them closer to aprogram& where the fans will not get to be as happy.
"n both scenarios the fans are less happy& one more than the other. ut& only in theits reputation.
Jesse DeGrendel, Devansh Gupta, Parinay Jajoo,onsider in making this decision? Whatyou get information to resolve thatthe oposing groups? +ow might your
s might have if there is a divisionthat can be taken& but each woud
versity could also raise tutuion. "te the ones paying for it.
riot& or refuse to attend game& hurtinghis uncertainty the university could
fundraising. 'his way it a$cts fans& nd
ain almost all of their fans.
tility values of attending themay see it as something keeping
ogram if the school goes to """
es taken from the consumer surplus ofore protable /in this case lower loss0
der& " can denitely narrow the list of alternatives and can decide on one car.
omplete my daily tasks.
decision context above0
ctive would then be to nd a way to minimi4e my travelling.
ere will be more alternatives to be considered as the main ob#ective changes drasticall
arinay Jajoo, Anup Chitikeneni
e like high speed of the car but " need to consider the fact that it has a higher mainten
dge Challenger0 where " can show6o$ to all the people " know& but again this is a costlyliable make like +onda or 'oyota which also lasts long and has a lower maintenance co
erence to safety " might think to buy an W3 enabled ,*8 like -ord619: or an cura 2
uld denitely buy a car where " can drive to where ever and whenever re<uired.
brand new carowned car
people living around0 to arrange a car6pool along with them to reach my daily destinati
uting between places
ible option. "t is also a good health exercise and doesn=t contribute to the pollution
3escribe a decision problem that you have faced recently /or with which you are curr3escribe the decision context and your ob#ectives. What were the specic decision tand what were the uncertainties? 3escribe the possible outcomes.
)ecently& in my car " started hearing a weired noice when " used my breaks.
'he decision context was what " should do to move forward. " could have ignored theabout my daily drive& or " could take it in to get looked at. "f " got it looked at " could twanted to take action or now.
" had a few ob#ectives in this. 2y rst one was safty. 'his was important because a cadangerous place if the breaks stop working. 2y other ob#ectives were maintain car odaily commute to work& and minim4e costs.
2y biggest uncertainty was if there was anything wrong or not. " would not be minimtook in the car and there was nothing wrong with it. ut& "f i" ignored it& " could loosetogether.
" ended up taking the car in and having to get the breaks replaced. 'his ended up beichoice as " was able to get all but A9 of it covered.
"f we look at part we can see that we hadto solve for the net present value by usingthe formula listed. We can take the initialpay ou of A1::: as the initial payment&
then after a year& we make back 1:@:& thisis the sum of all monthly payments. "t iscalculated as one due to the rate being
annual. We see in this case& the higher therate& the lower the BP8& this is due to
higher oportunity cost leading to a greaterloss.
"n part we are going to use the sameformula& but we will be solving for " /the
interest rate0 instead of BP8. We are toldthe BP8 is to be :& and all payments aregiven to us. We can plug in : to BP8 andsolve for a interest rate of @I. -ollow the
Create an in%ence diagram for the politicianSs decision in gure F.9 using precision"nclude the table showing decision alternatives& chance event outcomes and conse<
We can see that the alternitive is running for the house. +owever& it is an essentiallygurenteed win to the candidate. ,o it does not have to be included.
"f the candidate picks to run fo senate& there is a chance they loose. "n this case& thelaywer. "t is most ideal to have the position in the senate& but there is more risk to tawhen taking this path. 'he individual may end up in the worse possible situation& ha
2odify the in%uence diagram in gure F.11 /the hurricane forecast example0 sothat it contains nodes for each of the two ob#ectives /maximi4e safty andminimi4e cost0. Cost has a maximum attribute& but how can you dene safty?Create an attribte scale you can use to measure the degree of danger you mightenounter during a hurricane
s we can see in the added nodes& you can see that the decision will a$ect if wemaximi4e safty as a top pick& or if we minim4e cost.
We also have the idea of how to measure maximi4e safty. We an measure saftyin the number of in#uries that could occur. "f we wanted to be more specic& wecan look at the amount of medical cost that occur from a hurricane. We can alsolook at the power of the storm.
rinay Jajoo, Anup Chitikeneni"n this <uestion the main ob#ective is tWhen further reading the book we canthrough maximi4ing the image clairity&and maximi4ing the astronomy. " put itleast important.
-or me as a amiture astronomer& " seeimportant because " think it feeds into
When looking at maximi4ing image clafort his through the maximi4ation of bit causes the telescope to capture mroimportant to the image& and ma4imi4e
'he next is the maximi4ation of viewinpollution in the sky& which can be achican be achived by maximi4ing transpo
-inally we have the maximi4ation of <s an amiture astronomer& " would nottwo. '+is can be done though max adminimi4ing the cost& to minimi4e thethe max <uality of tracking.