Question

In the course, we have considered a 3-step algorithm for solving problems as well as a rational decision making model for making sound decisions. First, explain the usefulness of both from an economist’s point of view. Next, choose one and explain some of its specific limitations from a behavioral economist’s points of view. Finally, offer 3 approaches one can use to help overcome these limitations.

Answer 1

The usefulness of algorithms from an economist's point of view is as follows:

1. Decision making becomes more rational.

2. The decision is more efficient.

3. The decision is more precise, hence it facilitates the division of labour.

A disadvantage of algorithm is that the decision in algorithm whether that is accurate or not we might not know.

Again there is no supervision of human and machine intelligence outcome.

The three approaches on can use to overcome these limitations are as follows:

1. An economist will create how much value will the algorithm create with its decision. Rational organisations will adopt decisions with high probability values.

2. To supervise the results we can make a human supervise the decisions.

3. We need the algorithms to be very accurate for proper decision making.