Author Question: Name two ways in which perceptions of risk can be influenced by the reference points ... (Read 18 times)

gbarreiro · **on:** Jul 24, 2018

Name two ways in which perceptions of risk can be influenced by the reference points used.

Question 2

Which of the following warranty plans has a higher expected value for the customer? Plan A covers all possible problems with 30 probability; Plan B completely covers 30 of the possible problems, and offers no coverage on the remaining 70 of the problems. (Assume the individual payout is about the same on average for each of the problems covered in Plan B compared to those not covered.)
a. Plan A has a higher expected value for the customer.
b. Plan B has a higher expected value for the customer.
c. Plans A and B have the same expected value for the customer.
d. Not enough information to tell.

matt · **Reply #1 on:** Jul 24, 2018

Answer to Question 1

ANY TWO OF THE FOLLOWING ARE OK: 1) THE AVAILABILITY HEURISTIC; 2) DETAILED IMAGINATION; 3) ANCHORING; 4) THE REPRESENTATIVENESS HEURISTIC; 5) CONJUNCTION FALLACY; 6) FORGOTTEN BASE RATES.

Answer to Question 2

C