Are you a rational consumer? (fwd)
Willaim Thurber - PhD Student
thurber at FMGMT.MGMT.UTORONTO.CA
Wed Sep 13 12:27:34 MDT 1995
Great to have you back, here is a little more explanation, in caps just
to make the latest revision easy to read and distinguish from my earlier
No going back and changing answers.
No discussions or group work. (see caveat about playing this with your loved
Work quickly, the idea is to make choices like you would everyday.
No calculators (including small children if available)
a) $2500 with probability .33
$2400 with prob .66
$0 with prob .01
b) $2400 with probability 1.00 (certainty)
PROB .33 MEANS 33 TIMES OUT OF 100, .66 MEANS 66 TIMES OUT OF 100, ETC
YOU CHOOSE ONCE THINK OF THIS AS A JAR WITH 100 BALLS, 33 RED, 66 BLUE
AND 1 BLACK. PICK A RED WIN $2500, A BLUE GET $2400, A BLACK GET NOTHING
OR TAKE A PICK OUT OF A JAR WITH 100 BLUE BALLS.
a) -$400 with probability 1.00 (certain)
b) -$80,000 with probability .00001
THIS QUESTION MEANS YOU CHOOSE TO LOSE $400 ALL THE TIME OR RUN A RISK OF
1 IN 100,000 CHANCE OF LOSING $80,000.
About 600 people die each year from traffic accidents in New York State,
You are given that option 1 is a highway safety programs that will result
in 570 casulties per year and costs $12 million or a program that will
result in 500 deaths per year. What is the least amount of money that
you can spend on program a) so that you will choose program a):
a) 500 deaths per year, but costs $?? million
b) 570 deaths per year, but costs $12 million
THIS QUESTION IS TO GET YOU TO VALUE PROGRAM A SO THAT YOU WOULD CHOOSE
IT OVER PROGRAM B. IE: IF PROGRAM A COSTS THE SAME OR LESS THAN YOUR
VALUE OF IT YOU WILL CHOOSE IT OTHERWISE YOU WILL CHOOSE B.
Which is more likely, when you roll 6 dice and get a HHHHHH or HHTHTT?
6 HEADS OR 2 HEADS, A TAIL, A HEAD, TWO TAILS
Linda is 31 years old, single, outspoken and very bright. She attended
university and majored in women's history and philosophy. As a student
she was deeply concerned with the issues of discrimination and social
justice and also participated in anti-nuclear demonstrations. Based upon
this information which of the following is more probable?
a) Linda is a bank teller
b) Linda is a bank teller and active in the feminist movement
Questions 6, 7, 8, 9
You are involved in a contest in which winners receive a vacation package
and cash payment. Indicate your preference among the following sets of
alternatives. The vacation portion includes airfare to the resort and
Choose between the following prize packages in a contest
6a) 3 Days, $1600
6b) 10 Days, $700
WOULD YOU RATHER HAVE 3 DAYS VACATION AND $1600 OR 10 DAYS VAC. AND $700, ETC
7a) 3 days, $600
b) 5 Days, $300
8a) 5 days, $1000
8b) 10 days, $400
9a) 4 days, $720
9b) 8 days, $250
For each of the alternatives in the contest question please state the
smallest amount of cash you would accept in place of the prize.
In addition, next to each prize alternative rank each prize on a scale of
0-100 where 0 is 0 days, $0 dollars and 100 is 10 days and $2000.
a) if not 3 days, $1600 then: $_______ Rank: /100
HOW MUCH COLD CASH WOULD YOU TAKE IN PLACE OF 3 DAYS AND $1600? and on a
scale of 1 to 100 HOW GOOD IS THIS PRIZE?
b) if not 10 days, $700 then: $_______ Rank: /100
c) if not 3 days $600 then: $______ Rank: /100
d if not 5 days, $300 then: $_______ Rank: /100
e) if not 5 days, $1000 then: $______ Rank: /100
f) if not 10 days, $400 then: $______ Rank: /100
g)if not 4 days, $720 then: $______ Rank: /100
h) if not 8 days, $250 then $______ Rank /100
a) $2500 with probability .33
$ 0 with prob .67
b) $2400 with probability .34
$ 0 with prob .66
SAME AS BEFORE, PROB .33 MEANS 33 TIMES IN 100 TRIES, BUT YOU DO THIS ONCE.
House fire and flood insurance costs $400, the chance of lossing your
$80,000 home to either fire or flood is 1 in 100,000. Do you buy insurance?
About 600 people die each year in your hospital. Choose between two
hygiene plans that will reduce this number.
a) will save 30 lives but cost $12 million
b) will save 100 lives but cost $55 million
A single die has been thrown 8 times in a row each time coming up heads,
what is the probability of heads on the next roll?
Given a 100 people that match Linda's description in Q5 how many are bank
tellers and how many are bank teller/feminists?
___ Bank Tellers
___ Bank Tellers and Feminists
How much would you pay for the following items:
a wool suit?
a nice pair of pants?
a dress shirt/blouse?
an Italian Silk suit?
a Harris Tweed Jacket?
a Rush tie?
a poly/wool blend suit?
a Bill Blass Suit?
a silk suit?
a business shirt/blouse?
Dole or Clinton?
Just kidding, but if you have survived this silly thing up to now you
deserve a laugh. Send me your answers, remember no going
back and changing answers. You are on on the cyber space honour
code. I will reply in the method you choose private or public. But remember
being rational is not always good, it implies that you are always predictable
and therefore boring if not easy targets for marketers and others.
Hope you had fun
HOPE THIS HELPS!
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