Managerial Insolvency Timing Decision
Decision-making represents the choice of a particular course of action among different alternatives. This choice is the result of a cognitive process contingent on the individual characteristics of the decision-maker. In this process, the decision-maker combines his personal preferences and beliefs to reach a final choice. The literature broadly distinguishes two complementing cognitive systems performing this combination: reasoning and intuition. Reasoning can be viewed as an active effort to factually compute the best decision alternative. Intuition, in contrast, is effortless and indicates a “mindless behavior.” In both cases, decision-making is essentially based on the explicit as well as implicit processing of available or generated information. Moreover, the described cognitive process interacts closely with various context factors. These are mainly related to the type of decision problem under consideration as well as the properties of the actual decision environment.
KeywordsRisk Aversion Payoff Function Risk Attitude Prospect Theory Loss Aversion
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