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Hello sir,
How do we decide under Risk and Uncertainty when we are
i) Risk seekers
ii) Risk neutral and
iii) Risk averse ?What I think when given profit/inflow payoffs:
Uncertainty,
Risk seeker: Maximax
Risk neutral:
Risk averse: MaximinRisk,
Risk seeker:
Risk neutral:
Risk averse: Lowest standard deviationCould you please correct and direct me ?
Risk and uncertainty are not treated separately for this sort of question, and standard deviation is not in the syllabus for F5 !!!
I explain the answer to this in my lectures! For a risk seeker it is maximax; for risk neutral it is expected values; and, for risk avoiders it is either maximin or minimax regret.
Please don’t expect me to type out all my lectures here!!
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