Summary Class 12 Uncertainty-1 class notes and presentation

ECO204
Uncertainty 1 & 2
Overview
Ajaz Hussain, Economics, University of Toronto (STG)

,Ahead: Uncertainty 1 & Uncertainty 2

All “annotated” algebra, topics, (additional) examples, exercises
solutions) are in:

Uncertainty 1: Decision Making Under Uncertainty
“Chapter: Uncertainty I”

Uncertainty 2: Risk Avoidance
“Chapter: Uncertainty II”

,Uncertainty in Commerce
“Uncertainty in Business” (See Damodaran (NYU) “Valuation”)
Estimation Micro uncertainty Discrete risk
Uncertainty Uncertainty about “Discrete risky events”
“Wrong model” or market, products, (Drug failing a FDA
incorrect estimated competitive stage trial or
model inputs landscape, quality of Nationalization of a
management team company)
versus versus versus
Economic uncertainty Macro uncertainty Continuous risk
Unexpected Uncertainty about Due to ongoing
fundamental changes company profits changes in interest
in markets/ economy. impacted by macro rates or economic
Current models “out economic growth
of sync” environment


http://www.ianayr
(No “https”

, Examples: Decision Making Under Uncertainty




Yield Management (“Project 1 with uncertainty” -- com


Test audiences à Movie endings




Tasty 0 calories ≻ Anal leakage?