GMS-200 Intro to Global Management (18/09/2012)
Information and Decision Making
Subscription Ad on Economist.com
o 1. Economist.com subscription – US $59 One-year subscription to
Economist.com. Includes online access to all articles from the Economist since
o 2. Print Subscription – US $125
o 3.Print and online – US $125
You think you are getting a better deal with option 3.
“The Decoy Effect”
Influence people to go for the higher option.
o 36-Inch Panasonic $800
o 42-Inch Toshiba $1340
o 50-Inch Philips $1480
Observing and recording data is the central aspect of management.
Sometimes, the data at hand is not ideal!
UC Berkeley in the fall of 1973
8,442 men and 4,321 women applied
44% of the men and 35% of the women were admitted
The quality of the applicants was the same
Is this discrimination?
“The Simpson’s paradox”
When viewing totals of numbers it gives you a different view as if you broke up the
Applied Accepted Applied Accepted
1000 60% 100 60%
1000 30% 1000 30%
2000 900 1100 360
45% 33% Stock Predictions
One stock broker provides monthly predictions that correctly predicted 7 of the 9
downturns in the economy over the past 3 years.
Is he and expert?
Can Experts Predict Better?
Experts do not predict better.
When listening to Experts be very critically.
o Rat was placed in T-shaped maze.
o Food was kept randomly on either the right of the left transept of the T.
o Over the long run, food was kept 60% of the time on the left and 40% on the right
o Neither the students nor the rats was told these frequencies.
o Students were asked to predict where the food would be.
o Rats were right about 60%.
o Students were right 52%. (Tried to figure out a pattern, didn’t work out).
Classic “Linda” Case
Probability can be smaller on one option but we tend to choice that option