RMI Exam 2: Risk, Reward, Incentives &
Decision-Making Frameworks|Latest
Updated 2026 Rationales Graded A+
Contrast the risk/reward tradeoff at the individual, organizational, and societal levels
individual level
- utility
organizational level
- expected value
- opportunity cost
- cash flows
societal level
- take risk regardless of reward
recall how time can be reflected in the decision making model
doing things like discounting cash flows. to determine CF need r
differentiate the types of biases
- age biases
- cultural biases
- experience biases
- gender biases
- media biases
list the types of incentives
- financial
- moral
- natural
- coercive
- political
financial incentive
a monetary reward for a specific act, designed to encourage that act.
moral incentive
a motivating factor that appeals to someone's sense of right and wrong
, natural incentive
"curiosity, fear, anger, pain, joy, pursuit of happiness"
coercive incentive
The threat of a penalty for failure to act in a certain manner.
political incentive
a valued benefit obtained by joining a political organization
identify the effect that politics has on expected value calculations
politicians focused on short term rather than long term
Identify risks faced by individuals along the three elements of a loss exposure
- Assets exposed to loss
- cause of loss
- financial consequence of loss
apply the risk management process to individual risks
- risk changes based on age
- wealth vs income tradeoff
identify the specific risks faced by college students today
- smart pills
- STDS
- anxiety/depression
recognize the risks and rewards associated with cognitive enhancements
risk
- legal consequences
- health concerns
- moral dilemma
reward
- may help prepare for exams
recall some of the ethical considerations involved with cognitive enhancements
Is it fair? can it be stopped?
recall the categories of organizational risk
Decision-Making Frameworks|Latest
Updated 2026 Rationales Graded A+
Contrast the risk/reward tradeoff at the individual, organizational, and societal levels
individual level
- utility
organizational level
- expected value
- opportunity cost
- cash flows
societal level
- take risk regardless of reward
recall how time can be reflected in the decision making model
doing things like discounting cash flows. to determine CF need r
differentiate the types of biases
- age biases
- cultural biases
- experience biases
- gender biases
- media biases
list the types of incentives
- financial
- moral
- natural
- coercive
- political
financial incentive
a monetary reward for a specific act, designed to encourage that act.
moral incentive
a motivating factor that appeals to someone's sense of right and wrong
, natural incentive
"curiosity, fear, anger, pain, joy, pursuit of happiness"
coercive incentive
The threat of a penalty for failure to act in a certain manner.
political incentive
a valued benefit obtained by joining a political organization
identify the effect that politics has on expected value calculations
politicians focused on short term rather than long term
Identify risks faced by individuals along the three elements of a loss exposure
- Assets exposed to loss
- cause of loss
- financial consequence of loss
apply the risk management process to individual risks
- risk changes based on age
- wealth vs income tradeoff
identify the specific risks faced by college students today
- smart pills
- STDS
- anxiety/depression
recognize the risks and rewards associated with cognitive enhancements
risk
- legal consequences
- health concerns
- moral dilemma
reward
- may help prepare for exams
recall some of the ethical considerations involved with cognitive enhancements
Is it fair? can it be stopped?
recall the categories of organizational risk
