dolution

What is important to you in choosing a job? Certainly salary is important, and for many people location matters a lot. Other considerations might involve promotion potential, the nature of the work, the organization itself, benefits, and so on.

                Create a fundamental-objectives hierarchy that allows you to compare job offers. Be sure to establish the fundamental objectives and operational attributes that will allow you to make the necessary comparisons.

                Once you are satisfied with your hierarchy, use it to compare your job offers. You also may want to think about your “ideal” job in order to compare your current offers with your ideal. You also might consider your imaginary worst possible job in all respects. (For the salary attribute, try using the utility function for money that you assessed in Problem 14.12, or some variation of it. You may have to rescale it so that your best alternative is 1 and worst 0.) Assess weights for the attributes using pricing out, swing weighting, or lottery weights, being careful to anchor your judgments in terms of both ideal and worst imaginable jobs. Evaluate your various job offers with the additive utility function. If possible, use a computer-based multi-attribute decision program to do this problem.

Problem 14.12:

Assess your utility function in three different ways.

a. Use the certainty-equivalent approach to assess your utility function for wealth over a range of $100 to $20,000.

b. Use the probability-equivalent approach to assess U($1,500), U($5,600), U($9,050), and U($13,700). Are these assessments consistent with the assessments made in part a?

c. Use the trade-off method to assess your utility function for values ranging from $100 to $20,000.

Plot the assessments from parts a, b, and c on the same graph and compare them. Why do you think they differ? Can you identify any biases in your assessment process?