Financial and Economic Interpretation and Communication

ECONOMICS 1
FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
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ECONOMICS 2
Question1 This week’s workshop and online resources have used accounting methods to
determine investment appraisal. But what about intuition? Do you think that has a
role to play in making investment decisions?
Sadler-Smith (2016) defines intuition as the capability to have a grip of something or
situation without necessary rationally reasoning out about it. Intuition can also be termed as the
sixth sense and is crucial for managers in business for rational decision making. Every person is
born with intuition and it is the combination of intuition and experience that will make one a
good manager in business decision making. There is a situation where intuition plays a major
role in the modern world for decision making. According to Gilbert-Said et.al (2018), Intuition
plays a major role when the decision has to be made quickly as no time is needed to take in
comprehensive data or resource think about the investment decision. For example, a manager got
cup meeting time to decide whether to invest in another colleague’s business whom they have
just met.Intuition is also a better way of making a decision when the move is uncertain –
Knightian uncertainty. This is where the future of other deliberated alternatives remains
unknown. Intuition also responds quickly to inaccurate and flawed information that may have led
to poor investment decision saving the business a fortune. Importance of intuition is that it is all-
inclusive, concrete and doesn’t lead you into logical arguments. Models that can be applied
intuition decision making include Amon’s model of bounded rationality and the Heuristics and
Biases