What are some conditions under which business decisions are made using subjectiv
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Question
What are some conditions under which business decisions are made using subjective probability concepts? Provide at least two examples of subjective probability.What is the role of probability concepts in business decision-making? Provide specific examples. What are some conditions under which business decisions are made using subjective probability concepts? Provide at least two examples of subjective probability.
What is the role of probability concepts in business decision-making? Provide specific examples. What are some conditions under which business decisions are made using subjective probability concepts? Provide at least two examples of subjective probability.
What is the role of probability concepts in business decision-making? Provide specific examples.
Explanation / Answer
Condtions under which decisions are made are as follows: Certainty, this is when individuals are informed about a problem, alternative solutions are obvious and the likely of each solutions are clear. With this condition you have everything under control as you know that should something happen, you already have measures in place to take care of that situation. An example is in the case whereby you are involved in a car accident, say when you take insurance for your car you add the option of being..
What is subjective probability':- Subjective probability is a probability derived from an individual's personal judgment about whether a specific outcome is likely to occur. It contains no formal calculations and only reflects the subject's opinions and past experience. Subjective probabilities differ from person to person, and they contains a high degree of personal bias.
Example of subjective probprobability':- 1) In a scenario in which a person is asked to predict the percentage chance of whether a flipped coin will land with heads or tails up, his initial response may be the mathematically true 50%. If 10 coin flips occur, all resulting in the coin landing tails up, the person may change his percentage chance to a number other than 50%, such as saying the chance of it landing tails up is 75%. Even know the new prediction is mathematically inaccurate, the individual’s personal experience of the previous 10 coin flips has created a situation in which he chooses to use subjective probability.
2) You think you have an 80% chance of your best friend calling today, because his car broke down yesterday and he’ll probably need a ride.
Probability is a numerical measure of the likelihood that an event will occur. Probability values are always assigned on a scale from 0 to 1. A probability close to 0 is not likely to occur and a probability close to 1 is likely to almost certain to occur. Probability plays a huge role in decision-making for business. Decision-making is donein business based on probability at times. “Using probability concepts is a statistical approach for making decision.” “Business statistics apply mathematical formulas or models to business information in an attempt to determine the probability of success relating to an opportunity”. Probability concepts include an objective, statistical, model,observations, or constraints, analysis and a conclusion.For example, probability is done in so many experiments. For example, tossing a coin,select a part for inspection, conduct a sales call, rolling a die, and playing a football game.
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