How are risk and uncertainty related?
The concept of risk has no formal role in MaceTech Options Analysis. However, it may be seen by individuals as a noteworthy attribute of specific options. For example, some options have all-or-nothing or strongly categorised outcomes. A gamble based on a coin toss will have two well defined results. A lotto ticket delivers a list of formal outcome categories. Equally, risk may be associated with, say, getting a good meal at a restaurant, or, enjoying a night out at the movies. Such events may turn out poorly or superbly. Along with other perceived option attributes, risk can clearly influence appeal. Evaluations of appeal uncertainty incorporate perceptions of risk. In addition, however, perceptions of risk will also affect an individual’s evaluation of an option’s general level of appeal. When considering buying a house, perceptions of significant risk are likely to reduce purchase appeal as well as increase uncertainty. On the other hand, the option of an “adventure sport” holiday wi
