BUS221 - Business Decision Making

Week 1
1.​ 2 Components of Business Decision Making
●​ Making good decisions
●​ Convincing other people

2.​ Two different talents or “systems” in our brain

●​ System 1
○​ Fast
○​ Unconscious
○​ Automatic
○​ Everyday decisions
○​ Error prone
●​ System 2
○​ Slow
○​ Conscious
○​ Effortful
○​ Complex decisions
○​ Reliable
●​ Problem: Using system 2 is hard work, and lets system 1 have too much control.

3.​ Errors of Reasoning

●​ To reason effectively
●​ You need to learn to avoid or diminish sources of error
○​ Certain sources of error are so common, we’re given them names
○​ One important source of error: “Cognitive biases”

4.​ Cognitive biases

●​ Subconscious mental tendencies
●​ Usually rooted in intuition, that lead us into errors of judgement or decision
●​ Powerful, pervasive, and resist educational efforts
●​ hard-wired
Week 2
1.​ Class PPT
●​ Memos & Critical Thinking
○​ Memos: a central form of business communication​

●​ The 4Cs of Memo Writing

○​ Careful
■​ Don’t send a memo​
- while seriously angry​
- Before double-checking the recipients​
- while drunk or otherwise impaired​
- before attending to the other three Cs.
○​ Clear
■​ Ask yourself, “What do I want to achieve with this memo?”
■​ Plan what to say and in what order
■​ Use the memo’s layout to help clarify what you’re trying to say
■​ In the introductory paragraph,
●​ WHY you are writing
●​ Supply BACKGROUND as necessary
●​ Mention TASKS to be accomplished
○​ Concise
■​ As short as possible​
→ Don’t waste space on tangents
■​ One topic per memo
■​ Don’t harp on stuff that your audience already knows
■​ Passive voice
■​ Overuse of wordy phrases (also adverbs & adjectives)​
(e.g., in light of the fact that → because, concerning the matter of → about, are in
a position to → can)
○​ Clean
■​ Reread → Revise → Reread → Copyedit → Reread (have a friend read out loud)
→ Proofread → Reread → and only THEN send​

●​ Structure of Memo
○​ Header
■​ To: Readers’ full name(s) and job title(s)
■​ From: Writers’ full name and job title
■​ Date: Complete and current date (e.g., September 9, 2025)
■​ Subject: As concise and informative as possible
○​ Body (For class, 3 paragraphs)
■​ Introductory paragraph
●​ Why
●​ What background
●​ No Salutations (e.g., Dear Samantha, Sincerely)
■​ Explanation
●​ GIve the information
●​ Explain information and tasks
 ●​ Present your reasoning
●​ The main part of your argument (use multiple reasons to convince
others)
■​ Closing - Call to Action
●​ State the expected outcome or action in concrete terms​
(what do you want the readers to do?)
●​ State this politely
●​ ALWAYS include a “to-do” in the closing
●​ Conditional (e.g., If) - not a call to action​

●​ Summary
○​ Memos serve several purposes (express arguments and request action)
○​ Formulaic format can be beneficial
○​ Structure (Intro - Explanation - Closing)
○​ Follow the 4Cs (careful, clear, concise, clean)

2.​ Practice
●​ Fix the following memo header to make it comply with the rules for memo writing in this class.
From: Jennifer Rudlow, CEO
Date: January 22, 2025
Subject: next week’s presentation
To: VP Sales Gennaro Bertolini
○​ To: Gennaro Bertolini, VP Sales​
From: Jennifer Rudlow, CEO​
Date: January 22, 2025​
Subject: Next week’s presentation​

●​ Fix the body of the following memo to make it comply with the rules for memo writing in this class
“After doing some market research to evaluate possible scenarios and their probabilities, I was
able to perform an expected value calculation for launching our product in the Ontario market.
The expected value over the next three years is $13 million. I think this is a strong reason to
launch.​

I think we should launch.”

○​
Week 3
1.​ Reading
●​ Introduction
○​ Decision Theory
■​ another way to approach the study of rational decision-making
■​ The study of how to combine multiple factors to make the best choice given the
available options
■​ Provides a set of tools that allows us to break down complex problems into
simple calculations
○​ Rationality
■​ Instrumental rationality: The ability, the tendency to choose among options in a
way that maximizes achievement of our goals​

●​ Lottery Tickets
○​ Whether to buy a lottery ticket
■​ Ticket costs $5 (certainly have to give up $5)
■​ It could be worth $1,000,000 (it’s most likely worth nothing at all)
○​ The Expected Value of a Lottery Ticket
■​ Probability
●​ a way of expressing how likely an event is, typically expressed in terms
of long-term frequency
■​ The expected value
■​ Lottery ticket Example 1
●​ Price of ticket: $5
●​ Prize: $1,000,000
●​ Probability of winning = 1 in 100
●​ The Expected Value: (1% * $999,995) + (99% * -$5) = $9,995
■​ Lottery ticket Example 2
●​ Price of ticket: $5
●​ Prize: $1,000,000
●​ Probability of winning: 1 in 1,000,000
●​ The Expected Value: (0.000001 * $999,995) + (0.999999 * -$5) = -$4
■​ Expected Value: Expected Winnings - Expected Cost
●​ e.g.) {(0.000001 * $1,000,000) + (0.999999 % $0)} - (1 * $5) = -$4​

●​ The General Model

○​ Actions: possible actions that are open to you
■​ Buy a ticket or not
○​ States of Affairs (SoAs): the ways that events could make a difference to how successful
our actions are (attached to probability)
■​ The ticket you buy is the winner (1 in 1,000,000)
■​ The ticket you buy is nonwinning ticket (999,999 in 1,000,000)
○​ Outcomes: the result of you choosing a particular action (attached to value)
■​ Winning ($1,000,000 - $5)
■​ Losing (-$5)
■​ Not Buying ($0)
○​ Action 1: Higher Expected Value / Action 2: Higher Potential Value
 Action SoA: Probability Outcome: Value Expected Value

50% $2,000
(0.5 * $2,000) + (0.3 * $4,000) +
Action 1 30% $4,000
(0.2 * $1,000) = $2,000
20% -$1,000

50% $10,000
(0.5 * $10,000 + 0.5 * $8,000) =
Action 2
$1,000
50% -$8,000

●​ Expected Utility
○​ The quantity of utility that a particular action could be expected to return, on average, in
the long run, if that action were selected many times
○​ Utility is comparative
○​ No other symbol reflecting a unit​

●​ Other People’s Expected Utility

○​ Customer satisfaction: the utility your customers get from interacting with you
■​ Often interested in the utility and expected utility of others in business
■​ Example
●​ 25% chance of a longer wait (expected utility 3.4)
●​ 75% chance of a normal wait (expected utility 8.8)
●​ Current utility 5.6
●​ Expected utility = (0.25 * 3.4) + (0.75 * 8.8) = 7.45 ( > current)

2.​ Class PPT

●​ Situations Involving Probability
○​ Information that tells you what the odds are
■​ Because of math
■​ Based on experience
■​ Avoid guessing about the odds whenever possible​

●​ The goal
○​ Make reasoned decisions when we don’t have total certainty
○​ Want strong reasons supporting our decisions - even if we cannot guarantee the outcome
○​ A guess is not a strong reason​

●​ Good decision
○​ Based on good reasoning
○​ Not merely one that turns out well​

●​ Expected Value
○​ What the average value of some action would be if repeated many, many times
○​ Dealing with probability
■​ What are the possible outcomes of my action?
■​ How likely is each outcome?
 ■​ What is the cost/quality of each outcome?
■​ Are there ‘Fixed Costs’ to deal with?
○​ A business example
Should you buy a new $5,000 Customer Management System to help your sales team
manage accounts? Based on industry stats, you know the following:
●​ 50% → sales go up by 10%
●​ 25% → no real impact
●​ 25% → sales go down by 10%
You also know your sales last year were 50k and you have no reason to believe your
results from the purchase would be different from other companies.
■​ Expected Value: (0.5 * $5,000 + 0.25 * $0 + 0.25 * -$5,000) - $5,000​
​ ​ = $2,500 + $0 - $1,250 - $5,000​
​ ​ = -$3,750
○​ Scratch and Win
10:1 you win $10
100:1 you win $100
1000:1 you win $1,000
■​ Expected Value: (0.1 * $10 + 0.01 * $100 + 0.001 * $1,000 + 0.889 * $0) - $cost
○​ Practice
Your friend wants to start a new business, cleaning offices on the weekend. He wants
a small $100/month investment to partner with you so that two of you will work
together, cleaning. At the end of the month, he’ll split the revenues with you - if there
are any!
He has done research and honestly estimates that there’s a 60% chance the project
will go well, and your share of the sales will be $2,000. There’s a 10% chance it will go
very well, and your share of the sales will be $4,000. Otherwise, he expects to just
break even leaving no money coming back to you.
■​ Expected Value: (0.6 * $2,000 + 0.1 * $4,000 + 0.3 * $0) - $100​
​ ​ = $1,200 + $400 + $0 - $100​
​ ​ = $1,500​

●​ False precision and False Certainty

○​ Beware of false precision
■​ How could we possibly know that there’s a 30% chance the company will do
well?
■​ How could we ever know that if the company does well you’ll earn $500 profit on
your $10,000 investment? Why not $600? or $400?
○​ Keeping false certainty in mind
■​ Make sure to do the math but don’t be overconfident in the math​

●​ Expected Utility
○​ Uses the same math as Expected Value, but is a measure of utility
○​ Normal scale: from 0 to 10
○​ e.g.) happiness, pleasure, fun
○​ Practice
Your friend wants to start a new nonprofit, providing tutoring for high-school kids from
disadvantaged backgrounds. She has asked you to volunteer - every Saturday
morning for the next 3 months.
 ●​ 20%: 2 out of 10
●​ 60%: 6 out of 10
●​ 20%: 10 out of 10
■​ Expected Utility: 0.2 * 2 + 0.6 * 6 + 0.2 * 10 = 6​

●​ Summary
○​ Why/When do we use expected value?
■​ We are not psychic → We don’t know for sure what will happen in the future
■​ Helps determine how much money or utility we could expect if we made this
decision many, many times
■​ When uncertain about what will happen in this instance, knowing the average of
the long run is the next best thing
○​ To calculate EV or EU
■​ Make brackets for every possible outcome
■​ Put the odds of each outcome into the respective brackets (=100%)
■​ Multiple each probability by how much money or happiness each that particular
outcome would produce
■​ Subtract any fixed costs​

●​ Tutorial 1
You are a financial advisor, and you are advising [Link] on investing for his retirement. He
plans to invest $100 from each month’s pay cheque, until he retires 10 years from now. [Link]
has to choose between 2 different investment plans.
●​ Plan A is a risky plan that has a 15% chance of failing, which means [Link]’s
investment will simply be gone; a 40% chance of breaking even (he’ll get back
whatever he put in, but no more); and a 45% chance of giving him his investment back,
plus a nice 20% profit
●​ Plan B is safer: it has a 15% chance of losing [Link] just half of his investment; a 20%
chance of breaking even; and an 65% chance of giving him his investment back, plus a
reasonable 8% profit
○​ Expected Value
■​ Plan A: (0.15 * 0 + 0.4 * 12,000 + 0.45 * 14,400) - 12,000​
​ = 4,800 + 6,480 - 12,000​
​ = -720
■​ Plan B: (0.15 * 6,000 + 0.2 * 12,000 + 0.65 * 12,960) - 12,000​
​ = 900 + 2,400 + 8424 - 12,000​
​ = -276​

●​ Tutorial 2
You are not super happy in your current job and are thinking of switching. Staying is the safe
option.
●​ 90%: 6/10 / 5%: 8/10 / 5%: 2/10​

But switching is a risky move.

●​ 40%: 5/10 / 40%: 2/10 / 20%: 10/10
○​ Expected Utility
■​ Staying: 0.9 * 6 + 0.05 * 8 + 0.05 * 2 = 5.9
 ■​ Switching: 0.4 * 5 + 0.4 * 2 + 0.2 * 10 = 4.8​

3.​ Practice
●​ Expected Value
1)​ EV = 0.001 * $2,500 + 0.999 * $0 = $2.5​

2)​ EV = 1/7,000 * $21,000 + 6,999/7,000 * $0 = $3​

3)​ EV = 0.0001 * $5,000,000 + 0.9999 * $0 = $500​

4)​ a) EV = 0.2 * $10 = $2​

b) EV = 0.002 *$6,000 = $12​
c) EV = 0.000001 * $10,000,000 = $10​
→ $2 + $12 + $10 = $24​

5)​ EV = 1/3 * $3 + 1/25 * $50 + 1/2,000 * $5,000 = $5.5​

6)​ EV = 1/1,000 * $2,500 - $4 = -$1.5​

7)​ EV = 1/7,000 * $21,000 - $2.5 = $0.5​

8)​ EV = 1/10,000 * $500,000 - $10 = $40​

9)​ a) EV = ⅙ * $12 + ⅚ * $0 - $3 = -$1​

b) EV = 1/400 * $5,000 + 399/400 * $0 - $15 = $12.5 - $15 = -$2.5​
c) EV = 0.000001 * $15,000,000 + 0.999999 * $0 - $25 = -$10​

10)​EV = 1/4 * $4 + 1/20 * $60 + 1/1,000 * $2,500 - $10 = $1 + $3 + $2.5 - $10 = -$3.5​

11)​ EV = 5 * (1/200,000 * 1,000,000 - $10) = 5 * (-$5) = -$25​

12)​a) EV = (1/1,000,000 * $25,000,000 - $50) = -$25​

b) EV = (1/1,000,000 * $5,000,000 - $10) = -$5​

13)​a) Action 1 with state of the world s​

b) Action 1 with state of the world t​
c) Action 2 with state of the world s​
d) Action 2 with state of the world t​

14)​a) Action 1 with state of the world s: 20%​

b) Action 1 with state of the world t: 80%​
c) Action 2 with state of the world s: 50%​
d) Action 2 with state of the world t: 50%​

15)​a) possible states of affairs: winner / not a winner​

b) possible outcomes​
- buying lottery ticket and win​
- buying lottery ticket and lose​
 - not buying lottery ticket​

16)​a) possible outcomes​

- buying lottery ticket and win​
- buying lottery ticket and lose​
- not buying lottery ticket​
b) actual values​
- $95​
- -$5​
- $0​

17)​EV of Action 1 = 0.8 * $500 + 0.2 * $1,000 = $400 + $200 = $600​

EV of Action 2 = 0.8 * $1,000 + 0.2 * (-$1,500) = $800 - $300 = $500​

18)​EV of Action 1 = 0.8 * $20 + 0.2 * $50 = $16 + $10 = $26​

EV of Action 2 = 0.8 * $50 + 0.2 * (-$20) = $40 - $4 = $36​

19)​EV of Chocolate: 0.25 * $20 + 0.5 * $40 + 0.25 * $120 = $5 + $20 + $30 = $55​
EV of Ice cream: 0.25 * $100 + 0.5 * $60 + 0.25 * $30 = $25 + $30 + $7.5 = 62.5​

20)​EV of Park: 0.7 * $7,000 + 0.3 * $4,000 - $1,000 = $4,900 + $1,200 - $1,000 = $5,100​
EV of Grocery Store: $5,000​
→ at his own produce stand in a local park​

21)​1/36​

22)​1/6 * 1/2 = 1/12​

23)​t: 0.1​
u: 0.9 * 0.5 = 0.45​
v: 0.9 * 0,3 = 0.27​
w: 0.9 * 0.2 = 0.18​

24)​u: 0.6 * 0.25 = 0.15​

v: 0.6 * 0.5 = 0.3​
w: 0.6 * 0.25 = 0.15​

25)​States of Affairs​
- crash: 50%​
- make it through only the first year: 5%​
- turn a profit at least 6 months: 45%​
EV​
- First option: 0.5 * $1,300 - $1,000 = -$350​
- Second option: 0.5 * $5,000 + 0.05 * $5150 + 0.45 * $5,300 - $5,000 = $142.5

●​ Expected Value
1)​ a) pick the eggplant soufflé - enjoy / not enjoy​
b) pick the vegan stir-fry - enjoy / not enjoy​
 c) pick the fried octopus - enjoy / not enjoy​

2)​ a) take an umbrella - rainy​

b) take an umbrella - sunny​
c) not take an umbrella - rainy​
d) not take an umbrella - sunny​

3)​ EU of Action 1 = 0.6 * 5 + 0.4 * 6 = 3 + 2.4 = 5.4​

EU of Action 2 = 0.6 * 8 + 0.4 * 1 = 5.2​

4)​ EU of Action 1 = 0.55 * 7 + 0.45 * 3 = 5.2 ​

EU of Action 2 = 0.55 * 5 + 0.45 * 4 = 4.55 → 4.6​

5)​ EU of Action 1 = 0.1 * 9 + 0.9 * 1 = 1.8​

EU of Action 2 = 0.1 * 5 + 0.9 * 8 = 7.7​

6)​ EU of Action 1 = 0.95 * 4 + 0.05 * 2 = 3.9​

EU of Action 2 = 0.95 * 1 + 0.05 * 10 = 1.45 → 1.5​

7)​ EU of Action 1 = 0.3 * 5 + 0.7 * 4 = 4.3​

EU of Action 2 = 0.3 * 8 + 0.7 * 3 = 4.5​

8)​ EU of Action 1 = 0.25 * 7 + 0.75 * 5 = 5.5​

EU of Action 2 = 0.25 * 9 + 0.75 * 4 = 5.25 → 5.3​
EU of Action 3 = 0.25 * 2 + 0.75 * 6 = 5​

9)​ EU of Action 1 = 0.4 * 4 + 0.6 * 7 = 5.8​

EU of Action 2 = 0.4 * 8 + 0.6 * 1 = 3.8​
EU of Action 3 = 0.4 * 6 + 0.6 * 0 = 2.4​

10)​EU of Action 1 = 0.15 * 1 + 0.85 * 10 = 8.65 → 8.7​

EU of Action 2 = 0.15 * 7 + 0.85 * 1 = 1.9​
EU of Action 3 = 0.15 * 2 + 0.85 * 8 = 7.1​

11)​ EU of Action 1 = 0.1 * 2 + 0.25 * 4 + 0.65 * 8 = 6.4​

EU of Action 2 = 0.1 * 7 + 0.25 * 5 + 0.65 * 1 = 2.6​
EU of Action 3 = 0.1 * 5 + 0.25 * 9 + 0.65 * 3 = 4.7​

12)​EU of Action 1 = 0.3 * 8 + 0.22 * 5 + 0.48 * 9 = 7.82 → 7.8​

EU of Action 2 = 0.3 * 6 + 0.22 * 2 + 0.48 * 1 = 2.72 → 2.7​
EU of Action 3 = 0.3 * 3 + 0.22 * 7 + 0.48 * 4 = 4.36 → 4.4​

13)​EU of go-to shop = 6​

EU of top-of-the-line shop = 0.3 * 5 + 0.7 * 9 = 1.5 + 6.3 = 7.8​
EU of newer shop = 0.25 * 1 + 0.65 * 6 + 0.1 * 10 = 5.15​
→ top-of-the-line shop would be the best option​

14)​States of Affairs (Boardgame night)​

- having fun without Ian: 9​
 - having fun with Ian: 3​
States of Affairs (Clubbing)​
- magical night: 10​
- normal: 7​
EU of boardgame = 0.9 * 9 + 0.1 * 3 = 8.4​
EU of club = 0.05 * 10 + 0.95 * 7 = 7.15​
→ Going to boardgame night would be better​

15)​States of Affairs (Ramen)​

- crowded: 4​
- not crowded: 9​
States of Affairs (Cafeteria)​
- favorite dish: 10​
- general: 5​
EU of ramen = 0.3 * 4 + 0.7 * 9 = 7.5​
EU of cafeteria = 0.15 * 10 + 0.85 * 5 = 5.75​
→ Going to ramen restaurant would be better​

16)​State of Affairs (group)​

- distracted: 2​
- moderate benefit: 6​
- highly productive: 10​
State of Affairs (individual)​
- quiet: 8​
- noisy: 2​
EU of group = 0.3 * 2 + 0.5 * 6 + 0.2 * 10 = 5.6​
EU of individual = 0.35 * 8 + 0.65 * 2 = 4.1​
→ Joining a study group would be better​
Week 4
1.​ Reading
●​ Introduction
○​ Business is always a cooperative activity → getting others to agree with you is crucial
○​ Argument
■​ Used not only to convince others, but also help you find the best answer
■​ Useful in finding the best course of action & convincing others of it​

●​ Argument
○​ A verbal debate or a heated exchange of opinions (everyday language)
○​ An attempt to convince someone of the truth of some claim or point of view (second
meaning)
○​ A set of claims, some of which are intended to provide support for another of those
claims (formal)
○​ 2 Main parts of any argument
■​ Premise: A claim used within an argument to support the argument’s conclusion
■​ Conclusion: A claim that constitutes the main point of an argument, the thing the
arguer is trying to convince his or her audience of.​

●​ Claim
○​ A statement that can be either true or false
○​ If someone presents us with a new claim → ask what reasons there are to believe it​
→ Argument​

●​ Constructing and Reconstructing Arguments

○​ One of the key challenges: Flexibility of language
■​ Considerations of style and efficiency can result in two different people making
the same argument in different ways​

●​ Reconstruction of Argument (diagramming language)

○​ Identifying the claims in the argument (numbering claims)
■​ e.g.) ¹We need to advocate for hiring additional full-time accountants. ²The
complexity of our business has been increasing lately and ³our current
accounting team is overworked.
■​ Not every sentence contains exactly one claim
■​ e.g.) ¹The betting-odds of Italy winning the World Cup are 10:1. ²I’ve placed a
$100,000 bet with them. So, ³if Italy wins the World Cup this year, I’ll win a million
dollars. (only 3 claim, not 4)
○​ Determining the status of each claim (underlining conclusions)
■​ Status: premise & conclusion
■​ Conclusion Indicators
●​ Therefore, Thus, So, Consequently, Hence, It follows that, We may
conclude that
■​ Premise Indicators
●​ Since, For, Because, As indicated by, Given that, Inasmuch as
●​ Be careful when indicator is used as other meanings
■​ Underline: overall conclusion
 ■​ Dashed underline: intermediate conclusions
○​ Determining the relations between the claims in the argument (drawing a diagram)
■​ Premise: square
■​ Conclusion: circle
■​ Flow of logic: arrow​

●​ Principles of Argument Reconstruction

○​ Fidelity
■​ We want to reconstruct the argument in a way that’s faithful to the arguers
intentions
■​ We should try to stick to what it is that the arguer is actually trying to argue
○​ Charity
■​ If in doubt about an arguers’ meaning, we should reconstruct the argument in a
way that makes the arguer look smart
■​ If there is doubt, for example, as to which of two things an arguer might mean,
we should assume that he or she means whichever thing would make the
argument more reasonable
○​ We should follow the two principles in supplying missing pieces​

●​ Joint Premises and Layered Arguments

○​ Independent premises: premises that author intends to work separately in support of the
conclusion
○​ Joint premises
■​ premises that the author intends to work together in support of the conclusion
■​ underlined
○​ How to distinguish between independent and joint premises
■​ Assume that the opposite of one of the premises is true & the other premise still
provides any reasonable support for the conclusion
●​ YES → Independent Premise
●​ NO → Joint Premise
○​ Layered Arguments
■​ Arguments that contain at least one intermediate conclusion, that is a claim that
is supported by at least one other claim in the argument, and also itself supports
at least one other claim in the argument
■​ Intermediate conclusions: a circle inside a square
■​ Sub-arguments: smaller arguments in layered arguments
○​ How to distinguish between joint premises and sub-arguments
■​ Ask whether the sub-argument consisting only of those two claims is a
reasonable argument
●​ YES → premise-intermediate conclusion structure
●​ NO → Joint premises​

●​ Diagrams and Formulating Arguments

○​ Argument analysis and diagramming
■​ Help you formulate your argument
■​ Can be a way of double-checking your own arguments
●​ Gives you insight into your argument’s weaknesses
●​ Anticipate criticisms and objections others might raise when you present
your case
 ■​ Can be useful in helping you actually present your argument​

●​ Strong and Weak Arguments

○​ Weak Arguments
■​ It can have premises that aren’t acceptable
●​ e.g.) Toronto is the capital of Canada. The capital of Canada is located in
Nova Scotia. Therefore, Toronto is in Nova Scotia.
■​ It can use poor logic
●​ e.g.) Toronto is in Ontario. Timmins is in Ontario. Therefore, all cities in
Ontario start with T

2.​ Class PPT

●​ Understanding Arguments
○​ As critical thinkers, we can approach arguments others have already created in two
distinct steps and ask ourselves
■​ Analysis
●​ What claims are being made?
●​ What role does each claim play?
●​ How do the claims fit together?
■​ Evaluation
●​ How strong is each premise?
●​ How strong is the connection between premises and conclusions?
●​ Should I accept the argument?​

●​ Reasoning vs. Argument

○​ Reasoning
■​ Making connections (inferences) between claims to support a conclusion
■​ We can do this in our heads and out loud
■​ The result of these connections is called “a line of reasoning”
○​ Arguments as lines of reasoning
■​ Every argument must have:
●​ One or more reasons (premises), aimed at supporting
●​ A main point, Called the conclusion​

●​ Analysis: Identifying Claims

○​ Two central parts: premise & conclusion → CLAIMS
○​ Claim
■​ a particular type of statement
■​ Descriptions of the world that have a “truth value”
●​ Truth Value: can be (theoretically) true or false​

●​ Argument “Indicators”
○​ There are special words that indicate the role a claim plays
○​ Conclusion Indicators: So, Therefore, Thus, Hence, It follows that, For that reason
○​ Premise Indicators: Since, Due to the fact that, Given that, As, Because​

●​ Argument Reconstruction
 ○​ Typically, the arguments we encounter are presented in a natural language
○​ But they can lack clarity and exclude some important parts (sometimes to a problematic
degree)
○​ Thus, it is an essential skill to be able to reconstruct arguments for better understanding
& constructive criticism​

●​ Principles of Reconstruction
○​ Fidelity: Faithfulness
■​ When in doubt, reconstruct the argument so that it captures the argument the
arguer is actually trying to make!
■​ The principle of fidelity takes precedence over the principle of charity
○​ Charity
■​ When in doubt, reconstruct the argument so that it is as strong as possible (given
what is actually there)!​

●​ Hidden Parts
○​ Sometimes speakers/writers leave a part of their argument (premise or conclusion)
unsaid
○​ To fully understand someone’s argument, we may need to uncover hidden parts (and
write them out FOR the arguer)
○​ e.g.) ​
Premise 1: Only a company that could afford to lose money would trust Tollens AG.​
Premise 2: Modus has already found a different partner (X, principle of fidelity)​
​ Modus has more money than they know how to spend (X, principle of charity)​
​ Modus cannot afford to lose money (O)​
Conclusion: Modus would not do business with them​

●​ Diagram
○​ Explain, simplify, demonstrate complexity, help spot trouble, help find weak spots
○​ Argument Diagrams
■​ We can clarify the structure of an argument by diagramming its parts
●​ To show how many parts (premises, conclusions) it has
●​ How those parts are connected​

●​ Independent Premises
○​ Argument: (1) I don’t think we should eat there again, since (2) the service there was bad.
Besides, (3) it’s too far to drive conveniently.
■​ [2] [3] → square (premise)​
↘ ↙​
(1) → circle (conclusion)​

●​ Joint premises
○​ Some premises need each other in order to work at all
○​ Argument: (1) Peter only buys from Canadian businesses. And (2) Tollens is German. So,
(3) Peter won’t buy from Tollens.​
→ 2 premises work well to support that conclusion (2 premises have relevance)
■​ [1] [2]​
↓ one arrow only​
 (3)​

●​ Layered Arguments
○​ (1)Sales of test kits are down this month. So (2)we don’t need to produce as many kits
next month(dashed underlined). So, (3)we should order less of the key chemicals from
our supplier.
■​ [1]​
↓​
[(2)] Square + Circle​
↓​
(3)

3.​ Practice
●​ Section A: Translating standard form to natural language
1)​ (c)
2)​ (c)
3)​ (c)
4)​ (b)
5)​ (a)
6)​ (c)
7)​ (d)
8)​ (b)
9)​ (a)
10)​(c)
11)​ You should consider bringing an umbrella with you when you go out because it is raining outside.
12)​We should acquire firm B. Acquiring firm B would add value to our firm because Firm B sells
similar products to our firm.
13)​The product that you bought is defective and the store from which you bought your product has a
return policy that will accept defective products upon return. Therefore, you should return your
product.
14)​The sales for product x have been consistently dropping throughout this past year and our
marketing team’s analysis does not suggest that the sales of product x will begin rising again in
the future. Furthermore, product x is not sold in conjunction with any of our other successful
products. Hence, we should eliminate product x from our product line
15)​The recent batch of products we have released are defective and defective products are a danger
to consumers. Hence, our recent batch of products are a danger to consumers. It concludes that
we should recall the recent batch of products we have released.​

●​ Section B: Identifying premises and conclusions

1)​ Since (1)our business is growing, (2)we should consider opening a brand-new store at a new
location.
2)​ (1)Brandon has always been a great team player. (2)He has also helped the company generate
an extra 10% in revenue this year. Therefore, (3)Brandon deserves to be recognized by way of a
pay raise.
3)​ (1)The results of the customer satisfaction survey indicate that 90% of our customers are satisfied
with the customer service they receive at our store. Hence, (2)the majority of our customers who
took our customer satisfaction survey are satisfied with our customer service.
4)​ (1)We should hire a summer intern at our downtown branch since (2)there is an influx of business
during the summer months and (3)we can financially afford to hire an intern.
5)​ (1)We should consider downsizing our team of employees because (2)business has been slowly
declining, (3)we can no longer financially support a team of 30(dashed line), and thus (4)we need
to reduce our costs(dashed line).
Week 5

1.​ Reading
●​ Logical Support
○​ Claim C is supported by a set of claims, S, if accepting S makes it more reasonable to
accept C
○​ Proceedings in criminal court
■​ Prosecutor convinces the jury that the defendant is guilty
■​ Defence lawyer points out it’s not impossible that the defendant is innocent
●​ Making alternative scenario
○​ Premises of the prosecution’s argument → True
○​ The conclusion → False
■​ Alternative scenario: ↓ believable → room for the jury to have reasonable doubt ↓
→ the logical support that the premises provide for the conclusion ↑​

●​ Inductive Logic
○​ The premises offer some, and in many cases very strong, support for the conclusion
○​ No matter how strong, there is always at least a small theoretical chance the conclusion
could be incorrect even if the premises are true​

●​ Polls and Surveys

○​ Sample: the group that is surveyed
○​ (Target) Population: the broader group about which the conclusion makes a claim
○​ Margin of error
■​ Quantifies the uncertainty in a sample result and indicates how much the
sample's findings may differ from the entire population’s true value.
■​ e.g.) between 39% and 45% of Canadians
○​ Confidence level
■​ The statistical probability that the sample represents the population within the
specified margin of error
■​ Typically 95%
○​ Crucial Assumptions
■​ The sample is large enough to reach the specified confidence level
●​ Sample size ↑ Margin of error ↓
●​ Margin of error ↑ Confidence level ↑
●​ Confidence level ↓ Sample size ↓
■​ Sample size, margin of error, and confidence level are all derived under the
assumption that the sample is random
●​ Arguments relying on biased samples aren’t reliable even if the sample
size is quite large
○​ A particular, formalized subspecies of generalization
○​ General form
Premise 1: Proportion X of our sample of size S has characteristic c.
Premise 2: Our sample was random (or at least not biased).
Conclusion: The proportion of the target population that has characteristic c is X ± Y
(Y = margin of error)
●​ Generalizations
○​ Argument from example
■​ Informal reasoning that follows the same pattern
■​ Draw conclusions about a target population by observing a sample
○​ Generalizations
■​ We generalize from a number of observed instances in order to reach a
conclusion about a larger class of things
■​ It allows us to use the evidence to reach a conclusion that goes beyond that
evidence
○​ How can we tell a strong generalization from a weak one?
■​ Make sure you have examined enough instances to warrant your conclusion
●​ Failure: Hasty Generalization
■​ Make sure the instances are representative of the larger group about which
you’re trying to reach a conclusion
○​ General form
Premise: Individuals 1, 2, 3, … n (or proportion P of them) have characteristic c.
Conclusion: So, all individuals of this kind (or proportion P of them) have characteristic
c.

●​ Simple Induction
○​ Proceeds from a premise about a group to a conclusion about an individual belonging to
that group
○​ General form
Premise 1: Proportion P of group G has characteristic c.
Premise 2: Individual I is a member of G.
Conclusion: The probability that I has c is P.
○​ Be particularly careful when we use inductive logics about people
■​ Many similarities between people are rather superficial → the risk of faulty
categorization
■​ It may be a form of stereotyping → runs the risk of disrespecting the dignity of
individuals or groups of people​

●​ Analogy
○​ Comparison between two or more things (two things are alike in several observable
ways)
○​ General form
Premise 1: P and Q are alike (or similar) with respect to characteristic a, b, c, and d.
Premise 2: P has characteristic e.
Conclusion: Q probably also has characteristic e.
○​ Strength of an argument from analogy
■​ Many significant similarities → strong
■​ Very few similarities / Similarities are not closely linked to the question → weak
■​ A relevant dissimilarity between two things → weak
○​ Both the arguer and the audience need to understand and agree upon the relevance of
the various similarities and dissimilarities under consideration → tricky but important form​

●​ Inference to the Best Explanation (IBE)

 ○​ Proceeds from premises about observable facts to conclusions that explain those facts
○​ observe facts about your environment → search for another fact that best explains those
facts → conclude that the further fact is true
○​ Absolutely essential part of the scientific method (also important in business)
○​ General form
Premise 1: Claim (or set of claims) X is true.
Premise 2: Claim E is the best explanation as to why X is true.
Conclusion: E is true.
○​ Strength of IBE
■​ Whether explanation is the best explanation
■​ How much better it is than alternative explanations
○​ Evaluating an IBE
■​ Background Knowledge: An explanation must not conflict with any relevant
background knowledge we have
■​ Explanatory Power: An explanation is better if it can explain more things rather
than fewer
■​ Simplicity: An explanation is better it’s simpler
■​ Testability: An explanation should be testable
○​ Argument Indicators are much less reliable in IBE
■​ The same words we use as argument indicators are also used to signal the
direction of explanations
■​ Argument goes in the opposite direction of the explanation

2.​ Class PPT

●​ Strong & Weak Arguments
○​ Bad Premises: premise acceptability & basic justifications
○​ Bad Logics: The relationship between premises and conclusions
■​ Logic
●​ The proper ‘flow’ of ideas
●​ The study of whether one statement supports (provides reason to
believe) another
○​ The quality of the premises of an argument is a separate issue from the quality of its logic​

●​ Logical Support
○​ Do the reasons given make it reasonable to believe this conclusion, based on the
strength of these premises?
○​ Would it be unreasonable to doubt it?
○​ What would have to be the case for the premises to be true and the conclusion to be
false?​

●​ Classifying Arguments
○​ Deductive
■​ Modus Ponens
■​ Modus Tollens
■​ Disjunctive Syllogism
■​ Dilemma
○​ Inductive
■​ Analogy
 ■​ Generalization
■​ Inference to the best explanation
■​ Simple induction​

●​ Inductive Logic
○​ When we have some reasons / evidence for our conclusions, but that evidence could be
overridden
○​ Identify some common patterns (analysis) / some common problems in their usage
(evaluation)​

●​ Generalization
○​ Start with a number of observed instances (a “sample”) and reason to a conclusion about
an extension of the pattern to a larger class of things (the “population”)
○​ From narrow, limited data, moving to a more general conclusion
○​ Polls and Surveys
○​ Evaluation
■​ Is the ‘sample’ large enough?
■​ Is it random / representative?
○​ Individual → Group = (G)eneralization​

●​ Simple Induction
○​ e.g.) (1) Subway franchises on Yonge street are not successful. (2) Your business would
be a Subway franchise on Yonge. So, (3) your business is not going to be successful.
○​ Evaluation
■​ Is the Individual representative a member of the Group?
■​ Is the Group made up of sub-groups with very different proportions of X?
○​ Group → Individual = Simple (I)nduction​

●​ Generalization vs. Simple Induction

○​ All TRSM students are wonderful. So, you’re wonderful! (Simple Induction)
○​ Dr. B is great, Dr. Pouryousefi is great, Dr. MacDonald is great, and Dr. von Kriegstein is
great. So, all Law-Bus profs are great! (Generalization)
○​ The first four people on the class list all have family names that start with “A”. So
everyone in the class has a family name that starts with “A”. (Generalization)
○​ We evenly planted 100 sunflowers in this 10 square foot field, so this 1 square foot patch
of the field has about 10 sunflowers in it. (Simple Induction)​

●​ Inference to Best Explanation

○​ Believe the one offering the best explanation out of many possible causes
○​ The B.E.S.T Criteria
■​ B: Which explanation fits best with our Background knowledge?
■​ E: Which explanation has the most Explanatory power?
■​ S: Which explanation is Simple - does not require us to come up with weird
stories?
■​ T: Which explanation is Testable? - does it result in a prediction that, if it comes
true, could support or refute your explanation?
○​ Marking-up and Diagramming Missing Parts
■​ Add it to the end
■​ Number it sequentially
 ■​ Diagram it appropriately
○​ Evaluating IBE
1)​ Observation O
2)​ We’ve examined & compared all available explanations.
3)​ Explanation E fits better with the BEST criteria than any other explanation.
4)​ E is the best explanation for O
5)​ So, E
■​ Is O really happening? (or just something similar to O?)
■​ Are there other explanations we didn’t consider?
■​ Does E really fulfil the BEST criteria better than the other options?​

●​ Combined Arguments
①The new start-up company XYZ Ltd. will fail. After all, ②the company is very similar to ABC
Inc., which ③went bankrupt within a year. ④Both XYZ and ABC were founded by celebrities
without prior business experience, and ⑤both try to appeal to a target group that is very
different from the founder’s fan base. Moreover, ⑥XYZ hasn’t been able to attract any other
investors. ⑦The best explanation for why they haven’t found other investors is that most new
companies in this sector fail; so ⑧most new companies in that industry fail. So ⑨XYZ isn’t a
good investment. ⑩For if a company fails, then it is not a good investment.
○​ [4] [5] [6] [7]​
↘↙ ↓ IBE​
[(2)] [3] [(8)]​
Analogy ↘ ↙ [Link]​
[(1)] [10]​
​ ↓ Modus Ponens​
(9)​

①X is not an awful place. In fact, ②X draws people in like it is honey, and ③everyone likes
honey. Plus, ④if a place is awful, people avoid it. But ⑤people don’t avoid X. And, ⑥since a lot
of people use X, ⑦you probably use X, and ⑧you would not use something awful.
○​ [6]​
↓ [Link]​
[2][3] [4][5] [(7)][8]​
Analogy ↘ Modus Tollens ↓ ↙​
​ (1)​

●​ Tutorial
①The Charter guarantees freedom of conscience and religion. ②Bill 62 clearly violates that
right. Since ③it makes it illegal to cover your face on public transit, ④the bill forces some
Muslim women to choose between covering their faces and accessing all kinds of services. ⑤If
they cannot use public transit, they may not be able to work, shop, pick up their children from
school, visit a doctor, or take books out of a library. Therefore, ⑥bill 62 is incompatible with
the Charter.
○​ [3][5]​
↓​
[(4)]​
↓​
[1] [(2)]​
 ↓​
(6)

①My workplace is pretty great. ②Me and five other colleagues all love it, so ③every
employee here loves it. So, ④our next hire will also love it. Besides, ⑤working here is almost
like being on a tropical island. ⑥Both places are very warm, ⑦both have great food, and
⑧both have lots of friendly people around. And ⑨we all know that being on a tropical island is
great.
○​ [2]​
Generalization ↓ ​
[(3)] [6] [7] [8]​
[Link] ↓ ↘ ↓ ↙​
[(4)] [(5)] [9]​
(↘) ↙ Analogy​
(1)
Week 7

1.​ Reading
●​ Deductive Logic VS Inductive Logic
○​ Inductive
■​ the premises make their conclusion probable or likely
■​ Always possible that the conclusion is false even though the premise are true
■​ The truth of the premises in such arguments makes the truth of the conclusion
likely but not certain → defeasible
○​ Deductive
■​ the premises are true, the conclusion has to be true​
→ true premises guarantee the truth of the conclusion​

●​ Deductive Logic (연역법)

○​ ↔ Logically weakest arguments
■​ Irrelevant premises → don’t offer any real support for their conclusion​
→ premises (true) / conclusion (false)
○​ Deductive arguments are generally better than inductive ones? (X)
■​ Each with distinctive strengths and weaknesses
■​ Deductive → often achieved at the expense of using at least on premise that’s
somewhat doubtful​

●​ Conditional arguments (조건부 논증)

○​ Using premises that specify conditions under which something is true
○​ Forms of conditions
■​ Necessary (필요조건)
●​ B will definitely not happen (or not be true) unless A happens (or is true)
●​ Phrase: Only if
●​ e.g.) Having four sides (A) is a necessary condition for a geometric
shape to be a square (B)
■​ Sufficient (충분조건)
●​ If A happens (or is true), than B will definitely also happen (or be true)
●​ Phrase: If A, (then) B
●​ e.g.) If you deprive someone of oxygen for 24 hours (A), they will
definitely die (B)​
→ sufficient but not necessary (one can also die without being deprived
of oxygen)
○​ Modus Ponens
If P, then Q. If the numbers don’t add up, then we should ask for more details.
P. The numbers don’t add up.
Therefore, Q. Therefore, we should ask for more details.

○​ Modus Tollens
If P, then Q. If I need your help, then I’d have called you.
Not Q. I didn’t call you.
Therefore, not P. Therefore, I don’t need your help.
●​ Normative Claims and Bridge Principles
○​ Descriptive Claims
■​ T/F → depending on the physical facts of the world
■​ Our senses sometimes need help from instruments like microscopes to observe
these facts
■​ Sometimes our senses can detect only the effects of some facts (rather than
those facts directly)
○​ Normative Claims
■​ Claims about what should or ought to be the case, what someone should or
ought to do, or whether something is good or bad
■​ Most arguments in business contexts have normative conclusions
■​ e.g.) We should open a branch in Tokyo.​
I ought to get a raise.​
Moving our factory to Mexico would be bad.
■​ Using words like “ought” or “should” or using terms like “good, bad, evil, right,
wrong, admirable, deplorable, fantastic”
○​ An argument can’t simply move logically from one type to the other
■​ A set of purely descriptive premises cannot support a normative conclusion (vise
versa)
○​ How do we bridge the apparent gap between normative and descriptive claims?
■​ Bridge principle
●​ Combine descriptive and normative elements​
→ complex normative claims
●​ e.g.)​
- The person with the most experience should get the promotion.​
- We should do whatever maximizes our profits.​
- Telling a lie is always wrong.​
- Before you sign a contract, you should read the fine print.​
- If you’re a criminal defence lawyer, you ought to provide the best
defence for your client, even when you think they’re guilty.​
- Firing people without cause is bad.​

●​ Combined Arguments
1
The new start-up company XYZ Ltd. will fail. After all, 2 the company is very similar to ABC
Inc., 3 which went bankrupt within a year. 4 Both XYZ and ABC were founded by celebrities
without prior business experience, and 5 both try to appeal to a target group that’s very different
from the founder’s fan base. Moreover, 6 XYZ hasn’t been able to attract any other investors. ​
7
The best explanation for why they haven’t found other investors is that most new companies
in this sector fail; so 8 most new companies in that industry fail. So 9 XYZ isn’t a good
investment. For, 10 if a company fails, then it is not a good investment.
○​ [6] [7]​ [5] [4]​
IBE ↓ ​ ↘↙​
[⑧]​ [②] [3]​
S.I. ↘ ​ ↙ A​
[①] [10]​
​ M.P. ↓​
​ ⑨
2.​ Class PPT
●​ 2 Main Kinds of Claims
○​ Descriptive Claims
■​ Claims that describe how the world is
■​ Whether they are true or not depends on ‘physical’ facts about the world
■​ Typically things we can observe (sometimes with special instruments)
○​ Normative Claims
■​ Claims regarding what ought to be the case, what the world should be like
■​ Ethical Claims
●​ You shouldn’t tell lies.
●​ It’s wrong to manipulate people.
■​ Prudential Claims
●​ We should get the best possible insurance rate.
●​ When playing short-handed, you should focus on defence.
○​ What kind of Claim?
■​ We are obligated to put patient safety first. (NE)
■​ The shipping manifests I saw did not show the correct number of kits shipped,
after subtracting the kits that we used for demos. (D)
■​ We should plan how to handle the decreased demand for our products. (NP)
■​ If word gets out, sales will take a nosedive. (D)
■​ It would be irresponsible to trust information from our unreliable summer student,
Kaitlin. (NE)
■​ The physical device is manufactured by a subcontractor. (D)
■​ Two scientific studies published on the risk of transmission in cases like this both
say that the risk is tiny. (D)
■​ Facing a lawsuit for this would be bad for our company. (NP)​

●​ Evaluating Normative Claims

○​ Normative claims can’t be evaluated as easily as descriptive claims can
○​ Cannot evaluate normative claims using our senses or scientific instruments
○​ Instead, for any claim, we can ask, “What can be offered in support of this claim?”​

●​ Conditions
○​ Necessary Conditions
■​ In order to get paid, it is necessary that I go to work.
■​ For there to be fire, there must be oxygen.
○​ Sufficient Conditions
■​ If I meet all of my sales goals, I will get at least a standard 5% bonus.
■​ If I take the subway, I will arrive at Yonge Dundas Square.
○​ Necessary but not sufficient
■​ Wearing a suit is essential to make a good impression on the boss, but if you
want to impress him you also need to do good work.
○​ Sufficient but not necessary
■​ If I take the subway, I will arrive at Yonge Dundas Square
○​ Necessary and jointly sufficient
■​ If I wear a suit and a tie, bring my invitation, and arrive on time, I will be allowed
in for the dinner.
○​ 구분법
 ■​ 이 조건이 없으면 결과가 절대 일어나지 않는가? → Necessary Conditions
■​ 이 조건이 있기만 하면 반드시 결과가 일어나는가? → Sufficient Conditions​

●​ Two Deductively Valid Arguments

○​ Modus Ponens
If A, then C.
A.
Therefore C.
■​ A is sufficient, but not necessary for C
○​ Modus Tollens
If A, then C.
Not C.
Therefore not A
■​ C is necessary, but not sufficient for A​

●​ Summary
○​ Logic is about the support premises provide to the conclusion
○​ Some claims cannot logically support other claims by themselves
○​ At the strongest point, if the premises are true then the conclusion must be true
○​ These are called “Deductive” arguments

3.​ Practice
●​
Week 8
1.​ Reading
●​ Claims & Creative Thinking
○​ Creativity is needed to create a claim
○​ ECO approach - quick & easy method for generating reasons
■​ What Evidence for the topic should be considered?
■​ What would a Community of experts have to say?
■​ What Objections can you anticipate?
○​ Coming up with good questions
■​ Exam questions
●​ Test a person’s knowledge
●​ Seek confirmation about a fact
●​ T/F, MC, seeking a specific answer
■​ Inquiry questions
●​ Open-ended, stimulate thinking, spur further questions & discussion
●​ ECO approach​

●​ Beliefs
○​ We have beliefs we don’t express at all​
→ We don’t put them into words but simply act on them
○​ Some of those beliefs will affect whether you succeed or fail in business
○​ It’s important to think critically about just what you believe, and about whether those
beliefs are reasonable
○​ Believe X = be disposed to think that X is true​

●​ Claims
○​ A statement regarding some matter of fact & An attempt at describing some part of the
world
○​ Essential components of arguments and decisions
○​ Doesn’t have to be true in order to count as a claim
○​ Evaluating a claim = whether we are justified in believing it​

●​

2.​ Class PPT

●​ Fdgslokj​

3.​ Practice
●​ Sdfg
Week 10

1.​ Reading
●​

2.​ In-Class
●​ Groupthink
●​ Groupthink Mitigation Strategies
●​ Procedures
○​ Have explicit procedures in place that must be followed - mechanisms two wake up
system 2
○​ If you recognize a pattern of mistakes, attempting to “just try harder” is a huge mistake
●​ Procedures for fighting groupthink
○​ Put the decision in context: Compare your situation to the
●​ Conducting a Premortem
○​ What’s a postmortem? (부검)
○​ Premortem: just before a major decision, conduct a collective thought experiment
●​ Culture
○​ Shared beliefs and behaviours regarding how decisions should be made, including who
should be involved and what processes should be followed
●​ 옆자리애새끼릴스보면서존나처웃네 개시끄러워 시발것 다리그만떨어개색기야
●​ 근데 사실 나도 딴짓함 ㅎㅎ

3.​