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Showing posts with the label probability

Decision making: Likelihood over Rewards

Seeking the best possible outcome. People make decisions every day of their life. Some of these decisions are rational while others appear to be more irrational. Understanding the evaluative processes of such decision-making helps business leaders better grasp the choices people make between the probability of a positive outcome and higher levels of reward. Research helps show the risk aversive state of normal decision-making as people seek to gain higher likelihood of positive outcome over higher potential rewards. Decision making can be defined by a number of important key parameters that include probability of an outcome, the size of an outcome, and the variance of an outcome (Christopoulos, et. al., 2009). When making a decision people try and understand the likelihood that they will achieve a certain outcome, the potential value of that outcome and the uncertainty of that outcome. If there is a high likelihood that the object will be obtained, this object is of great