Depending on the degree of certainty about the states of nature,every decision-making situation can be classified into ______ categories.
A)three
B)four
C)five
D)six

Question

Quizplus · Accepted Answer

The three categories are:
1) Certainty: In this situation, the decision maker is certain about the outcome of each decision. There is no risk or uncertainty involved.
2) Risk: In this situation, the decision maker knows the probability associated with each possible outcome. This category includes decision-making under risk or decision-making under uncertainty with known probabilities.
3) Uncertainty: In this situation, the decision maker does not know the probability associated with each possible outcome. This category includes decision-making under uncertainty with unknown probabilities.

Depending on the Degree of Certainty About the States of Nature,every