The difference in Decision Making Under Risk and decision making under uncertainty is that under risk, we think we know the probabilities of the states of nature, while under uncertainty we do not know the probabilities of the states of nature. True False

Question

Social Studies

Oneill

25 July, 12:23

The difference in Decision Making Under Risk and decision making under uncertainty is that under risk, we think we know the probabilities of the states of nature, while under uncertainty we do not know the probabilities of the states of nature. True False

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Leslie Hatfield · Answer 1

True

Explanation:

Decision making under certainty:

It is the decision, maker known with reasonable certainty what the alternative and outcomes of each alternative, and outcomes of each alternative. Under the condition of certainty, accurate, measurable, and reliable information on that to base the decision is available.

Decision making under risk:

When a manager lacks perfect information or wherever an information asymmetry exists, the risk arises, Under a state of risk decision-maker has incomplete information about available alternatives but has a good idea of the probable outcomes of each alternative.