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Economics
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Individual decision-making is a good approach when:

A. The decision will directly impact many agencies, individuals, or community members.

B. The leader has enough expertise to make a good decision.

C. Commitment to the decision by other people is critical.

D. The decision is complex with many possible solutions

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Joshua Stredder
Joshua StredderLv10
1 Apr 2021
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Related questions

I need a clear and detailed briefing of this question by analyzing the problem by asking the below three questions and Answer to these questions will suggest solutions centered on.

Question: Housing Bubble

“Because of the hosing bubble, many houses are now selling for much less than their selling price just two to three years ago. There is evidence that homeowners with virtually identical houses tend to ask for more if they paid more for the house. What misconception are they making?”

You can analyze the problem by using these three questions:

1. Who is making the bad decision?

2. Does the decision maker have enough information to make a good decision?

3. The incentive to do so?

Answer to these questions will suggest solutions centered on:

1. Letting someone else make the decision, someone with better information or incentives

2. Giving the decision maker more information

3. Changing the decision maker’s incentives.

I need a clear and detailed briefing of this question by analyzing the problem by asking the below three questions and Answer to these questions will suggest solutions centered on.

Question: Snacks, Beer, and Marijuana

“Snacks food venders and beer distributors earn some monopoly profits in their local markets but see them slowly erode from various new substitutes. When California voted on legalizing marijuana, which side would you think that California beer distributors were on? What about snack food venders? Why?”

First, explain it and then analyze the problem by using these three questions:

1. Who is making the bad decision?

2. Does the decision maker have enough information to make a good decision?

3. The incentive to do so?

Answer to these questions will suggest solutions centered on:

1. Letting someone else make the decision, someone with better information or incentives

2. Giving the decision maker more information

3. Changing the decision maker’s incentives.

1. Who is making bad decisions?

2. Does the decision maker have enough information to make a good decision?

3. The incentive to do so?

The three step process is used to evaluate and analyze the decision.

The first step is used to identify the decision and the process taken up to reach on a decision. Any decision based upon only gut feeling or marketing myopia without any rational approach will lead to the bad decision.

The second step deals with the necessary information available to the decision makers. It requires an information system that consists of quantitative data as well as qualitative information. It helps in taking a rational and optimum decision of:

1. What to produce

2. How to produce

3. How much to produce

4. Where to produce

5. The most suitable market for sales and pricing strategy

The third step deals with the incentive such as stock option plans, bonus and profit sharing agreement. It prevents any agency conflict also. Therefore, the three step process prevents any moral hazard and encourage managers to take an informed decision of for the benefits of all the parties.

Question:

Is it always possible to have the information to make the best decisions? Why? (In 100-150 words)

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