Asked by Sylvia Joseph on May 28, 2024
Verified
If a decision maker chooses an option that leaves him or her worse off than choosing another available option,he or she is:
A) using bounded rationality.
B) basing the decision on risk aversion.
C) making an irrational decision.
D) making a rational decision.
Irrational Decision
A choice made that contradicts logical reasoning, often influenced by emotional factors or cognitive biases.
- Identify the scenarios where individuals might make decisions that are not economically optimal due to irrational behaviors or misperceptions.
Verified Answer
SJ
srajan jaiswalMay 30, 2024
Final Answer :
C
Explanation :
Choosing an option that leaves the decision maker worse off than choosing another available option is an irrational decision because it goes against the goal of decision making – to choose the option that maximizes the decision maker's overall utility or satisfaction. Choosing such an option may be due to a lack of information, flawed reasoning or biases, which are all examples of irrational decision making.
Learning Objectives
- Identify the scenarios where individuals might make decisions that are not economically optimal due to irrational behaviors or misperceptions.
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