When probabilities can be assigned to the occurrence of states of nature in the future,the situation is referred to as
A)decision-making under risk.
B)decision-making under certainty.
C)decision-making under uncertainty.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

When probabilities can be assigned to the occurrence of states of nature in the future, the decision-maker knows the possible outcomes and their probabilities. Hence, the decision-maker is making a decision under risk because the outcomes are uncertain, but the probabilities can be quantified.

When Probabilities Can Be Assigned to the Occurrence of States