BUS221 | Lecture 3: Decision making and Communication

These flashcards cover key terms and concepts from the Business Decision Making course, focusing on decision theory, expected value, and utility.

Expected Value (EV)

The average value of some action calculated over many repetitions.

Expected Utility (EU)

A measure of the satisfaction received from an outcome, on a scale from 0 to 10.

Decision Theory

A framework for making rational decisions that considers possible actions, states of the world, and outcomes.

Call to Action

A directive in a memo urging for a specific response or change.

Memos

Standard business communications used to convey decisions or information.

Probability

A measure of the likelihood of a particular outcome occurring.

Utility

The satisfaction or benefit derived by a person from consuming a good or service.

Fixed Costs

Costs that do not change regardless of the level of goods or services produced.

Long-Term Strategy

A plan of action designed to achieve a particular goal over an extended period.

False Precision

The illusion of a precise estimate about the probability or impact of an uncertain event.

Maximum Expected Value

The decision option that yields the highest expected value among alternatives.

Decision Model

A structured approach to making choices by evaluating possible actions and their outcomes.

Crisis Response

Strategies implemented to manage and mitigate the consequences of a crisis.

Action

A choice made in decision making that involves taking steps toward an outcome.

Outcome

The result that follows a specific action or decision.

Pros and Cons

The advantages and disadvantages considered before making a decision.

Equity vs. Debt

Equity represents ownership with profit sharing, while debt signifies a fixed expectation of returns.