Decision Made Under Risks.
Another common decision making condition is state of risk. Under this state, the accessibility of each option and its possible payoffs are all connected with probability approximation. For instance, when company like Boeing produces its products without knowing possibilities of inflation ahead. This is what as we refer to as decision making under risk. The prices might fall due to uneven market forces, and as result the company might incur huge losses from making such decisions. When decisions are made under a state of risks, director must sensibly approximate the probabilities associated with the alternatives. Making decision under the condition of risks is often accompanied by ambiguity and chances of bad decisions. For instance, companies like automobile in the recent recession, a company like Ford laid off its workers, But during the depth of the recession the company noted that that as fuel price was dropping the demand of their products was increasing, so the firm re –hired its former workers to help build more vehicles. The risk was that if the gas prices had surged unexpectedly and demand for its vehicles had cooled, Ford would have been in the embarrassing position of having recalled workers and then once again terminating them. But the upside was that if Ford assessment were correct, the firm would generate new revenues and more profits
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