Deductive reasoning theory
Deductive reasoning theory is a process of thinking logically in which the result of the decision (or the conclusion) is based on the premises that are supposed to be true in general (Whatls.com, 2013). In other words, it is the truth in an idea of premises logically to insure the idea of conclusion, given that the conclusion has no doubt in the reasoning (William, 2006). The premise is a reasoning that is supposed to be true or commonly believed. For example:
(i) The earth is a planet;
(i) All planets orbit the sun;
(ii) Therefore earth orbits the sun.
This is because the premise of the earth is a planet and that all planets orbit the sun are the truth, for this reason the conclusion of the earth orbits the sun is necessarily true. The function of deductive reasoning works from general to more detailed. It operates equivalent with propositional calculus theory. Propositional calculus means, “the branch of logic that studies ways of joining and/or modifying entire propositions, statements or sentences to form more complicated propositions, statements or sentences, as well as the logical relationships and properties that are
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Conversely, the rejection of a sure thing in favor of a gamble of lower or equal expected value (Pratt, 1964). In the other words, it is the tendency to avoid taking risks (Bernstein, 1996). In addition, this behavior of avoiding risk is sometimes called risk-seeking behavior (Kahneman & Tverksy, 1984). For instance, a person is given a choice between getting $100 in certainty and given a 50% chance of getting $200 or 50% chance of getting nothing. Applying the risk aversion theory, the person will probably choose the 100% chance of getting $100. This is because the person prefers to be secured and certain about what he is getting rather than taking the risk and facing