“IF TWO HEADS ARE BETTER THAN ONE, ARE FOUR EVEN BETTER?”
Answer of Q1: I think Maggie has made a rational decision as this is a family matter. Her uncle left her $100,000. Maggie has used the emotional intelligence approach by obtaining the consent of her family members in making decision of investment. It can have two impacts; if her focused group has some good background in investment portfolios then the decision would be right. Otherwise she would have taken the wrong decision in involving too many people as too many cooks spoil the broth. Answer of Q2: I would definitely go with the option 2 as this involves a good ROI (Return On Investment). As far as risk is concerned, every investment involves some amount of risk but we have to take calculated risk and we should avoid keeping all our eggs in one basket to diversify the risk. Answer of Q3: Individuals may have different risk attitudes. Risk-averse people might choose an option which involves very low risk. Risk-seeking will definitely go with the option which involves moderate to high risk. Answer of Q4: When people are in groups, they make decision about risk differently from when they are alone. In the group, they are likely to make riskier decisions, as the shared risk makes the individual risk less. Maggie’s family would have chosen the second option which involves moderate risk. As also mentioned in the case that Maggie’s current salary is adequate to meet her current living expenses, therefore, she can bear the moderate risk factor by enjoying the profit.