Flashcards
Risk and Uncertainty
Cards in this deck (11)
- 1Riskinvolves situations or events which may or may not occur, but whose probability of occurrence can be estimate statistically .
- 2Uncertain eventUncertain events are events where the outcome cannot be estimated with a statistical probablity
- 3Expected valueExpected value is a weighted average value of the different possible outcomes from a decision, where weighting are based on the probablity of each possible outcome
- 4Expected valuesExpected values in dicate what an outcome is likely to be in the long term,. If the decision can be repeated many times over. Fortunately, many business transacation do occur over and over again.
- 5Expecte dvalues indicate what an outcome is likely to be in the. ............... if the decision can be................... over. Fortunately many business transacations do occur over and over againExpecte dvalues indicate what an outcome is likely to be in the long term if the decision can be repeated many times over. Fortunately many business transacations do occur over and over again
- 6DisadvantagesLong run average
EV may never occur
Ignores extreme outcomes - 7maximin basismaximise the minimum achieve profit
- 8maximax basismaximise the maximum achieveable profit
- 9minimax regretopportunity loss basis for decision making
- 10maximin problemsDefensive
Ignores probablity of each different outcome - 11MaximaxIt Ignores the outcomes that are less than the best possible.
For some decision options the worst possible may be more than the organisation can afford. It is a decision rule for the risk seeker
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- Flashcards on Risk and Uncertainty, created by D A on 05/07/2018.
- Created by
- D A · Jul 2018
- Updated
- Jul 5, 2018
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