Direction: Von Nuemann and Morgenstern assume a decision framework in which all options are thoroughly considered, each option being independent of the others, with a numerical value derived for the utility of each possible outcome (these outcomes reflecting, in turn, all possible combinations of choices). The decision is then made to maximize the expected utility.
(71), such a model reflects major simplifications of the way decisions are made in the real world. Humans are not able to process information as quickly and effectively as the model assumes; they tend not to think (72) as easily as the model calls for; they often deal with a particular option without really assessing its (73), and when they do assess alternatives, they may be extremely nebulous about their criteria of evaluation.
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NA
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- Quantitatively
- Systematically
- Scientifically
- Analytically
Correct Option: D
Let’s first get some background knowledge into what has been described in the passage. Von Nuemann and Morgenstern were amongst the most famous mathematicians and economists; they together formed the mathematical field of ‘game theory’ and how it could be applied to economics. The given paragraph talks about the theory they developed: they formulated a theory which one can use to make a choice among the different available options. The paragraph mentions a term, ‘expected utility’ which is basically a way to balance risk versus reward with the help of a mathematical function. Utility can be described as a measure of one’s preferences amongst the options or choices available. We just have to grasp the context of passage in order to pick the right options. So, they are basically talking about a seemingly complex and thorough mathematical model which is aimed at helping someone make a better choice.
Option ( d ) is correct , because analytically means ‘by virtue of analysis’. It is used when we mention or tell something that has been derived or deduced after some analysis has been done; hence, what we mention then represents some logical reasoning. The statement which has this word missing states that model is designed, because humans do not think ‘quickly and ‘effectively’, and the clause followed by the blank mentions that human often do not assess options, which means that they do not think analytically.
Option (a) is wrong, because quantitatively means in ‘a quantitative matter’ which is inappropriate here. Option (b) is wrong, because systematically means ‘in a systematic or planned manner’. The context in the sentence is of assessing and analyzing, not planning. Option (c) is wrong, because scientifically means ‘in a scientific manner’ or, thinking in the way a scientist would. Although, scientific thinking involves analysis, yet this is a different form of thinking as it involves taking the principle of science into consideration, but the given context is not pointing in that direction.
