A decision maker is assigning equal probabilities to all states of nature in a decision making under uncertainty situation but is uncomfortable doing so.Therefore, this is actually a decision making under risk situation.

Question

Quizplus · Accepted Answer

In decision-making under uncertainty, the decision maker does not have any information about the likelihood of each state of nature. In such a case, assigning equal probabilities to all states is a reasonable approach. However, if the decision maker is uncomfortable with this approach, it means that there is some information available about the likelihood of different states, which converts the situation into a decision-making under risk scenario where the probabilities can be estimated.

A Decision Maker Is Assigning Equal Probabilities to All States