... essential to compare possible benefits with potential costs to help us choose the best course of action. In this experiment, I intend to investigate risk taking behaviour. The first theory which was put forward to explain decision making was utility theory. It puts forward the idea that when people make decisions, they think about the probability of a given outcome and the utility of that outcome. Expected utility is calculated using the following equation:- Expected Utility = (probability of a given outcome) x (utility of that outcome) Tversky and Kahneman (1987) carried out the Asian Disease Study to investigate decision making. They gave participants a scenario, in which a rare disease was to kill 600 people. Participants were given two programmes to combat the disease. Programme A would save 200 lives, while programme B had a third probability that all 600 lives would be saved and a two third probability that no ...

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