Question: For example, if Ken purchases a Sub 1 0 0 and if there is a favorable market, he will realize a profit of $ 2

For example, if Ken purchases a Sub

100

and if there is a favorable market, he will realize a profit of $

245, 000 .

On the other hand, if the market is unfavorable, Ken will suffer a loss of $

250, 000 .

But Ken has always been a very optimistic decision maker.

.

What type of decision is Ken facing?

.

What decision criterion should he used?

.

What alternative is best?

.

Although Ken Brown is the principal owner of Oil Inc, his brother Bob is credited with making the company a financial success. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about business and the oil industry. Given the information, it is likely that Bob will arrive at a different decision. What decision criterion should Bob use, and what alternative will he select?

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