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In "Rational Choice with Passion: Virtue in a Model of Rational Addiction," Andrew M. Yuengert of Pepperdine University argues that there is a conflict between reason and passion.
What might that conflict be?
What implications does it have for applying the economic model? (Christian)

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manhokwe tawanda
manhokwe tawandaLv10
1 Mar 2021

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This question pertains to the rational decision-making model. In answering the questions below use examples to highlight your arguments. Make sure that your external research is properly cited (APA)

Analyze the rational actor paradigm model and the influence of human behavior on rational decision making (bounded rationality, the role of incentives).

What analytical methodology (or methodologies) is recommended for selecting amongst alternative decisions choices so that a decision be made based on a rational foundation.

How does the recommended methodology eliminate the impact of the sunk cost fallacy?

This question pertains to the rational decision-making model. In answering the questions below use examples to highlight your arguments. Make sure that your external research is properly cited (APA)

In his spare time, Mr. Smith makes chain mail using metal rings he buys from a hardware store, a C-clamp, and a pair of pliers. He sells the final product at local crafts fairs and at bikers' annual conventions. He argues that "The materials cost me $30, and the rest is just my labor, which is free. One vest sells for about $150, which gives me a net profit of $120 for three nights of work."

Is he talking about economic profit or accounting profit? Explain the difference between the two.

Also, comment on Mr. Smith's statement from an economic perspective (hint: implicit cost)

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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