In many ways, the material in this module deals with ‘real’ life since uncertainty pervades almost all of our decisions. Please describe a decis
In many ways, the material in this module deals with "real" life since uncertainty pervades almost all of our decisions. Please describe a decision you've had to make recently and identify the parameters that had a level of uncertainty. What was the level of uncertainty? Also, assess your level of risk taking as you moved toward a decision.
Please respond to the discussion question with one original post and at least two substantial replies to other students. A substantial reply is considered a post which moves our discussion forward and deepens our understanding of the material. You may wish to post a probing question (i.e. How would your model apply in ____ context? What would happen if we changed ______?) or by adding new information (i.e. This is similar to _____ because ______). Posts which simply state "Way to go Bob!" or "I thought the same thing." do not deepen our understanding and will not earn full credit.
Discussion post 2nd -Kelly-
During the pandemic, my job had a restructuring, and we were given the choice to choose an early separation package from the company or to stay in our current roles and see if our division would be included in future downsizing. There was uncertainty in whether I would be able to retain my role after restructuring was completed. If I didn't maintain my role after the restructure, I wouldn't be eligible for a separation package.
Without a separation package, planning for future expenses would be difficult and may affect my ability to pay tuition and household bills. Also, I would be in a position where I would need to find another job that I qualified for and had an acceptable salary.
As I made a decision, the risk was that taking too long to decide would cause me to miss the deadline to apply for the separation package. This would force me to wait & see what the future would be without the security of a job. It wouldn't be guaranteed that I would find a job quickly and could jeopardize my finances.
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Student number 1- Jeremy- Discussion Post:
A recent decision that I had to make recently was to either buy out the lease on my current car or purchase a new one. The parameters that had a level of uncertainty were: will I like the new vehicle once delivered from the factory, will the dealership's appraisal of the current car would change at the time of the trade, how much would the payment change from my current payment, and if there was a payment increase would it be worth the extra cost over the possible maintenance costs for the old vehicle.
The level of uncertainty was different for each parameter. For example, I was reasonably confident that I would like the new vehicle once it was delivered from the factory since it was the same make and model with all the options as the previous car. Therefore, I was certain I would like it and put a deposit down to hold the vehicle when it arrived. There was no risk involved in this part of the decision since the deposit would be refunded if I did not like the car. On the other hand, the most uncertain parameter was if the dealership's appraisal of the current car would change at the time of the trade. The assessment could change for multiple reasons like damage to the vehicle, excessive mileage, and poor maintenance. Again, there was a minor risk involved since the dealership could decrease the appraisal on the car, changing the cost of the new vehicle.
Regarding the change in payment, a slight increase was expected for the newer year model. However, another parameter that could have influenced the decision was whether an increase in the payment is worth the extra cost over the possible maintenance costs for the old vehicle. According to an article written by Maddy Martin (2016), the average maintenance cost over ten years for a Honda is $7,400, which breaks down to $740 a year or roughly $61 a month. Therefore, if the appraisal meets expectations and the final payment calculation was either lower than or between the current payment of the old car and the $61, there would be no risk in moving forward with the purchase. A warranty would pay for significant repairs, and the dealership covers maintenance costs for three years. Throughout the process, there were levels of risk on parameters that could change the terms of the deal, but there was no overall risk since I could turn down the dealership's offer and stay with the original vehicle.
Reference
Martin, M. (2016, June 1). The most and least expensive cars to maintain. YourMechanic Advice. Retrieved April 4, 2022, from https://www.yourmechanic.com/article/the-most-and-least-expensive-cars-to-maintain-by-maddy-martin
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