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Unformatted text preview: themselves ex, 1 in 100 lightbulbs is defective inter-Frm risk various outcomes do not occur often enough in the Frm such that the Frm cannot estimate the probabilities of each outcome themselves the Frm goes to an insurance Frm to protect against it ex, airlines get probabilities from an insurance Frm uncertainty exists when there is a need to make a decision but you don;t know what the outcomes are there is no way to know proFt Topic the reward the frm recieves For having made the correct decision in the Face oF uncertainty loss the penalty a frm experiences For making the wrong decision **the importance oF keeping data** ex: military hospital and expected wounds the innovation approach...
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This note was uploaded on 04/02/2008 for the course ECONOMICS 220 taught by Professor Clare during the Spring '08 term at Rutgers.
- Spring '08