IDEAS in AGORA: Decision-Making Risk: The Difference Between Risk And Uncertainity In Economic Activities

• Authors: Nicoleta Vasilcovschi , Gabriela Munteanu
• Languages of publication: EN

Abstracts

EN

Economic activities are always supposed to carry with them the risk of market. Our area of research is concerned with what is known as the model of risk decisions at the level of economic activity; a model that can be valuable at any point of economic development. In our research, we present important aspects of risk in taking decisions in the previous and current dynamics of the market. The conditions of taking decisions with potential risks provide decision-makers with the possibility to analyze and calculate risk in order to know what can be gained and lost. In our paper, we present a short description of a different model of risk in economic activity and of decision-making risk, providing examples that have been offered by various authors. For example, Friedman and Savage present the utility function of an economic agent and its availability to accept the risk, while Markowitz defines utility in terms of winning or losing. Our paper starts with a presentation of the quantification of risk in economic activity. In the second part, we present a model of decision-making risk that is applied in economic activities and the difference between risk and uncertainty.

Keywords

EN

Risk aversion; Asymmetry; Decisions; Assumed risk; Decision-making risk; Monte Carlo simulation; Uncertainty

• Publisher: Sciendo
• Journal: Human and Social Studies
• Year: 2014
• Volume: 3
• Issue: 2
• Pages: 34-46

Dates

published

2014-06-01

online

2015-02-06

Contributors

author

Nicoleta Vasilcovschi

• Academic Economic Teacher at Jiangsu Xishan Senior High School, Wuxi, China

author

Gabriela Munteanu

• Associate Professor at Andrei Saguna University, Constanta, Romania

References

• Bernoulli, Nicholas. Letter #18 to Daniel Bernoulli, in B.L. van der Waerden, ed., Die Werke von Jakob Bernoulli 3, K 9. Basel: BirkhäuserVerlag, 1732: 566-568.
• Friedman, Milton, Savage, L.J (1948).Utility Analyses of Choices Involving Risk, in Journal of Political Economic 56 (4), University of Chicago Press, 1948: 279-304.
• Frois Gilbert Abraham. Instabilite, cycles, chaos, Paris: Economica, 1995.
• Markowitz, Harry.The Utility of Wealth, in Journal of Political Economy, Cowles Foundation Paper 57, LX (2), New Haven, Connecticut, 1952: 151-158.[Crossref]
• Neumann, John Von, Morgenstern Oskar.Theory of Games and Economic Behavior, New Jersey: Princeton, 1944.

Identifiers

DOI

10.2478/hssr-2013-0028