BUS 221 Lecture Notes - Lecture 2: Decision Theory, Instrumental And Value Rationality

• School: Ryerson University
• Department: Business
• Course: BUS 221
• Professor: Haskovon Kriegstein

Document Summary

Is the ability & tendency to choose among options in a way that maximized achievement of one"s goals. Requires us to consider the likely result of each possible action, and how well it would fulfill our goals. Probability - way of expressing how likely an event is. Expected value of an action is the sum of the value of each possible event, multiplied by its probability. Ev = (p1 x v1) + (p2 x v2) + (pn x vn) Where p is the probability, v is its value. Actions - the possible actions that are open to you (ie. buying a ticket vs not buying one) State of affairs - the ways events could turn out that are beyond our control, but make a difference to how successful our actions are.