We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Probablity And Decision Making Essay Sample

essay

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Introduction of TOPIC

All incentives are dependent on another event occurring meaning that there are about probability which in each option is conditional which implies that an event   “EVENT A will occur given the knowledge that EVENT B already occurred.  Both events A and B are independen meaning that event A has no effect on the probability of event B occurring (Easton, 1998).  In this case one is to determine the probability of each option being   preferred by card holders and the probability of a consumer receiving a prize in the course of the year if he has chosen option C.

Option A: Cash back when a consumer makes an online purchase

            If a consumer chooses to make an online purchase using his card then money is offered back to him as an incentive for using his card to make the purchase. Online shopping is convenient, “has infinite shelf space” and enables the consumer compare product price and features (Hobbs, 1993). Limitations include loss of enjoyment of retail shopping and loss of privacy. Given the above incentive where money is offered back to the consumer after making the purchase online. Probability of this option being preferred by card holders depends mainly on the cardholders themselves and the main question is, are they willing to make purchases online and if so what amount of money is being offered as cash back?

Option B: Cash back when a consumer makes a purchase at a clothes store

Since cash is offered back as an incentive for making a purchase at a clothes store  this option has  the highest degree of conditional pr

obability in because it is only when a card holder makes a purchase at a clothing store then cash is

Sorry, but full essay samples are available only for registered users

Choose a Membership Plan
refunded back to him or her. The probability of this option being preferred or chosen by card holders can be calculated as follows:

Take the incentive as “A” and purchase as “B”

Given the two events, A and B probability that event A will occur can be given as follows:

P (B n A) =P (A/B)

 So P, (A/B) =P (A n B) / P (B)

   P (A n B) and P (B n A) are the same

Option C: Entry into a sweepstake whenever the consumer makes a purchase

This option as an incentive can be viewed as having where conditional probability is at its lowest when viewed in the context of how and where the purchase is made because this is not dictated to the card holders by the bank  thus purchase can be made anywhere but the probability of this option being chosen by the consumers is also very low because the only event that has to occur is that the card holder has to make 1000 purchases for a prize to be won and it has been estimated that an average of 52 purchases are made in a year  for one to win a prize he or she will have to wait for a certain period calculated as follows:

Number of purchases required / Average number of purchases made in a year

 = 1000/52

                                  =19

This could be viewed by card holders to be costly thus reducing the chances of probability of option C being selected.  Probability of an individual consumer receiving a prize in a given year is low because an average of 52 purchases are made in a year and for one to receive a prize 1000 purchases are  to be made by the consumer.

            The two ways of assessing probability are different because in option B the number of purchases to be made for one to be entitled to cash back is unlimited but in option C a card holder must make 1000 purchases to win a prize.

Consumers are rational in decision making (Kim & Srivastava, 2001) in that they always seek options that favor them.  When it comes to probability of choosing any of the above options they will go for the option in which they stand to gain more.

REFERENCE LIST 

Easton, T. (1998). An Introduction To Probability Theory And Its Application. New York: Guilford Press.

Kim, N. & Srivastava, H. (2001).Rationality and decision making, Michigan: Earthscan

Hobbs, D. (1993) Doing the Business. London: Oxford University Press

We can write a custom essay on

Probablity And Decision Making Essay Sample ...
According to Your Specific Requirements.

Order an essay

You May Also Find These Documents Helpful

Consumer Behavior Theory

The main purpose of this report is to investigate how the theory Word of Mouth of reference group reflect the personal consumer behavior. This report based on four reliable scholarly journals and one text book. Reference group has a vital role in the Consumer Behavior study. Reference group refers to those groups that usually have a direct or an indirect effect on consumer’s attitude and decision. Also, individuals are affected by reference group through consumer’s evaluation, aspiration and behavior (Babin and Harris 2015, 156). In reference group, the information of a product or service, which is conveyed by consumer to consumer, is known as Word of Mouth (WOM) (Babin and Harris 2015, 160). Typically, WOM spreads out directly to the consumers which makes the information more reliable and trustworthy. WOM in reference group may help the local market influencers, tastemakers and trendsetters to promote their marketing. There are two types...

Vocabulary for Biology Exam

Biomagnifications: A process by which chemical substances become more concentrated at each tropic level. Biosphere: The living part of the Earth. Biomes: Divisions of the biosphere and is defined by its vegetation and community structure. It occurs because of global weather patterns and topography. Example: Desert, Grassland, Scrubland, temperate deciduous forests, tropical rainforest and tundra. Succession: The change in non-living and living factors in ecosystem overtime. Primary succession: When plants begin growing in a previously lifeless area (Example: new volcanic island). It begins with no life, no soil available, etc. Biomass: Total mass of dry organic matter at a particular tropic level of an ecosystem using this formula Gross production: The amount of energy (total) trapped in the organic matter (KJ per area per time) KJ/m2yr Net production = Gross production (GP) - respiration (R) Energy pyramid: Plants use energy from the sun and use photosynthesis to make glucose which...

Code of Ethics

I have chosen the ethic - Selling products that the company knows are harmful or addictive to consumers. A real world example of selling products that addict consumers or are harmful holds good for the cigarette manufactures. A warning-smoking is injurious to health is inscribed on the pack, both the consumer and the seller ignore. The seller is oriented towards minting money from the sale from the cigarette and the consumer being addicted to it cannot stop smoking. According to Surgeon General smoking cigarette causes Cancer, cardio-vascular, Lungs and Heart Diseases and emphysema. When expecting women smoke it complicates their pregnancy and it results in stillbirths. The new borns are most affected by smoking expecting women. Placing myself in the role of the Vice President of Marketing of Philip Morris USA in the 1960s, the general public was not aware of the harmful effects of the cigarettes; the company is...

Popular Essays

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?