Decisions Admitting Uncertainty SEA – General Engineering Department Risk, Uncertainty and Sensitivity
• Certainty – assumptions that the given data and
the estimated values had high degree of accuracy • Uncertainty – deviations in actual values caused by various factors, such as errors of analysis, misinterpretation of available data, and changing external economic environment which invalidates past experience Risk, Uncertainty and Sensitivity
• Risk – deviations of actual outcomes from the
predicted outcomes due to chance causes • Sensitivity – measure of the degree of changes in the factors or parameters used in an economic analysis which will affect an investment decision Risk and Uncertainty
Causes of Risk and Uncertainty:
• Insufficiency of available data • Misinterpretation of data • Changes in economic conditions Sensitivity Analysis Sensitivity analysis determines the effect of variation or uncertainty in parameter estimates of any project. Usually, one factor at a time is varied, and independence with other factors is assumed. Sensitivity analysis determines how a measure of worth (PW, AW, ROR or B/C) and the alternative may be altered if a particular parameter varies over a stated range of values. Sensitivity Analysis Types of sensitivity analysis: • Variation of one parameter at a time for a single project or for selecting mutually exclusive alternatives • Variation of more than one parameter for a single project • Sensitivity of mutually exclusive alternative selection to variation of more than one parameter Sensitivity Analysis Procedures to conduct sensitivity analysis: • Determine which parameter(s) of interest might vary from the most likely estimated value. • Select the probable range (numerical or percentage) and an increment of variation for each parameter. • Select the measure of worth. • Compute the results for each parameter using the measure of worth. • To better interpret the sensitivity, graphically display the parameter versus the measure of worth. Sensitivity Analysis of Multiple Parameters for Multiple Alternatives • The economic advantages and disadvantages among two or more mutually exclusive alternatives can be studied by making three estimates for each parameter expected to vary enough to affect the selection: a pessimistic (lowest value), a most likely and an optimistic estimate (largest value). • It analyzes the measure of worth and alternative selection sensitivity within a predicted range of variation for each parameter. States of Nature
• States of nature concerns future events or
outcomes beyond the control of the decision maker. • They may represent values of certain random variables such as annual income, salvage value, purchase price or useful lives of equipment. Payoff Matrix • A payoff matrix is a way of indicating the relationship among possible decision alternatives and the various states of nature. • Quantitative payoffs result if the payoff value are monetary in character such as present worth or equivalent annual amounts. • Qualitative payoffs occur if the payoff values are non- monetary in nature but the payoff values must be expressed in terms of comparable quantities. Dominance and Satisficing
• Dominance is a useful screening method for
eliminating inferior alternatives from the analysis. • Satisficing, method of feasible ranges, requires the establishment of minimum or maximum acceptable values (the standard) for each attribute. Decisions under Uncertainty To guide the decision maker in his choice of the best alternative the following decision rules, based on the premise that probabilities cannot be assigned, are employed. • The Laplace Principle • Maximin and Minimax Principles • Maximax and Minimin Principles • Hurwicz Principle • Minimax Regret Principle The Laplace Principle
This rule is based on the philosophy that if
probabilities cannot be assigned to the states of nature, then the states should be considered equally probable. It is assumed that all possible outcomes are equally likely, and there is no basis for one state of nature to be more likely than any other. Maximin and Minimax Principles The maximin rule involves the determination of the minimum profit for each alternative and then selecting the alternative which will give the maximum of these minimum profits. If 𝑃𝑖𝑗 is the payoff for the ith alternative 𝐴𝑖 and the jth state of nature 𝑆𝑗 , then the maximin principle may be stated as: 𝑚𝑎𝑥 min 𝑃𝑖𝑗 select the alternative 𝐴𝑖 with the . 𝑖 𝑗 Maximin and Minimax Principles In case of losses or costs, apply the minimax principle. The maximum loss or cost for each alternative is determined, and from this set of maximum values the minimum loss or cost is chosen. The minimax principle involving loss or cost value is: 𝑚𝑖𝑛 max 𝑃𝑖𝑗 select the alternative 𝐴𝑖 with the . 𝑖 𝑗 Where 𝑃𝑖𝑗 is the payoff for the alternative 𝐴𝑖 and the state 𝑆𝑗 . Maximax and Minimin Principles If the matrix values are gains or profits for different alternatives, apply the maximax rule, where the maximum gain is determined for each alternative and then choosing that alternative which gives the largest value of the maximum profits. The maximax rule may be stated as: 𝑚𝑎𝑥 max 𝑃𝑖𝑗 select the alternative 𝐴𝑖 with the . 𝑖 𝑗 Where 𝑃𝑖𝑗 is the payoff for the alternative 𝐴𝑖 and the state 𝑆𝑗 . Maximax and Minimin Principles In case the matrix values are losses or costs, the minimin principle is applied. For each alternative in the matrix, we determine the minimum loss or cost, and from these minimum values, choose the alternative with the least or minimum value. The minimin principle involving loss or cost values is: 𝑚𝑖𝑛 min 𝑃𝑖𝑗 select the alternative 𝐴𝑖 with the . 𝑖 𝑗 Hurwicz Principle
It allows the decision maker to select an index
of optimism, 𝛼, whose value ranges from 0 to 1. A value of 𝛼 = 0 indicates zero optimism or extreme pessimism, while 𝛼 = 1 will indicate extreme optimism or zero pessimism. The alternative with the maximum Hurwicz value is selected. Hurwicz Principle The Hurwicz principle involving gain values is: select the alternative 𝐴𝑖 which maximizes Hurwicz value max 𝑃𝑖𝑗 min 𝑃𝑖𝑗 𝐻𝑖 = 𝛼 + 1−𝛼 . 𝑖 𝑖 For decision problems involving costs or losses, the Hurwicz principle may be stated as: min 𝑃𝑖𝑗 m𝑎𝑥 𝑃𝑖𝑗 𝐻𝑖 = 𝛼 + 1−𝛼 . 𝑖 𝑖 Minimax Regret Principle
The decision maker wishes to minimize the
maximum regret about a particular decision. This regret is the difference between the best payoff which could have been achieved and the actual payoff which the decision maker selected. The alternative with the minimum regret value is the desired alternative. Minimax Regret Principle Procedure for developing the regret matrix for gain values: 1. For a particular state of nature 𝑆𝑗 , determine the largest gain, which is denoted by 𝐺𝑗 . This gain is given a zero regret value. 2. Subtract the other lesser gain values in 𝑆𝑗 from 𝐺𝑗 . The differences are considered as units of regret values for the different alternatives. 3. Complete the regret matrix for each state by repeating steps 1 and 2. Minimax Regret Principle Procedure for developing the regret matrix for loss or cost values: 1. For a particular state of nature 𝑆𝑗 , determine the least loss or cost, which is denoted by 𝐶𝐿 . This loss or cost is assigned a zero regret value. 2. Subtract 𝐶𝐿 from each of the other loss or cost values in 𝑆𝑗 . The differences are units of regret values for the other alternatives. 3. Complete the regret matrix for each state by repeating steps 1 and 2. Decisions Recognizing Risk and Decisions Admitting Uncertainty 1-1] A company is uncertain how many units of a new product can be sold each year. To determine its sensitivity to varying annual sales volumes, cost estimates for manufacturing the product were found to be as follows: Direct materials P4.50 per unit Direct labor P10.25 per unit Overhead P25,000 + P3.10 per unit In addition, new equipment costing P150,000 will be needed. It is expected that it would be used for 10 years with a salvage value of P25,000 at the end of that time. A market study indicates that the product will sell P25.00 per unit. If money is worth 12% to the company before taxes, determine the rate of return for annual sales volume of (a) 5,000 units, (b) 7,000 units and (c) 10,000 units. What is the sales volume to just break even? Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝐴. 5,000 𝑢𝑛𝑖𝑡𝑠 𝑃25 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 = ∙ 5,000𝑢𝑛𝑖𝑡𝑠 = 𝑷𝟏𝟐𝟓, 𝟎𝟎𝟎 𝑢𝑛𝑖𝑡 𝑃150,000 − 𝑃25,000 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 10 0.12 = 𝑃7,123.02 1 + 0.12 −1 𝑃4.50 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑐𝑜𝑠𝑡 = ∙ 5,000𝑢𝑛𝑖𝑡𝑠 = 𝑃22,500 𝑢𝑛𝑖𝑡 𝑃10.25 𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 = ∙ 5,000𝑢𝑛𝑖𝑡𝑠 = 𝑃51,250 𝑢𝑛𝑖𝑡 𝑃3.10 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡 = 𝑃25,000 + ∙ 5,000𝑢𝑛𝑖𝑡𝑠 = 𝑃40,500 𝑢𝑛𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝑃7,123.02 + 𝑃22,500 + 𝑃51,250 + 𝑃40,500 = 𝑷𝟏𝟐𝟏, 𝟑𝟕𝟑. 𝟎𝟐 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑜𝑓𝑖𝑡 = 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝐶𝑜𝑠𝑡 = 𝑃125,000 − 𝑃121,373.02 = 𝑷𝟑, 𝟔𝟐𝟔. 𝟗𝟖 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑃3,626.98 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 = = ∙ 100% = 𝟐. 𝟒𝟐% 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑃150,000 Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝐵. 7,000 𝑢𝑛𝑖𝑡𝑠 𝑃25 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 = ∙ 7,000𝑢𝑛𝑖𝑡𝑠 = 𝑷𝟏𝟕𝟓, 𝟎𝟎𝟎 𝑢𝑛𝑖𝑡 𝑃150,000 − 𝑃25,000 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 10 0.12 = 𝑃7,123.02 1 + 0.12 −1 𝑃4.50 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑐𝑜𝑠𝑡 = ∙ 7,000𝑢𝑛𝑖𝑡𝑠 = 𝑃31,500 𝑢𝑛𝑖𝑡 𝑃10.25 𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 = ∙ 7,000𝑢𝑛𝑖𝑡𝑠 = 𝑃71,750 𝑢𝑛𝑖𝑡 𝑃3.10 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡 = 𝑃25,000 + ∙ 7,000𝑢𝑛𝑖𝑡𝑠 = 𝑃46,700 𝑢𝑛𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝑃7,123.02 + 𝑃31,500 + 𝑃71,750 + 𝑃46,700 = 𝑷𝟏𝟓𝟕, 𝟎𝟕𝟑. 𝟎𝟐 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑜𝑓𝑖𝑡 = 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝐶𝑜𝑠𝑡 = 𝑃175,000 − 𝑃157,073.02 = 𝑷𝟏𝟕, 𝟗𝟐𝟔. 𝟗𝟖 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑃17,926.98 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 = = ∙ 100% = 𝟏𝟏. 𝟗𝟓% 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑃150,000 Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝐶. 10,000 𝑢𝑛𝑖𝑡𝑠 𝑃25 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 = ∙ 10,000𝑢𝑛𝑖𝑡𝑠 = 𝑷𝟐𝟓𝟎, 𝟎𝟎𝟎 𝑢𝑛𝑖𝑡 𝑃150,000 − 𝑃25,000 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 10 0.12 = 𝑃7,123.02 1 + 0.12 −1 𝑃4.50 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑐𝑜𝑠𝑡 = ∙ 10,000𝑢𝑛𝑖𝑡𝑠 = 𝑃45,000 𝑢𝑛𝑖𝑡 𝑃10.25 𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 = ∙ 10,000𝑢𝑛𝑖𝑡𝑠 = 𝑃102,500 𝑢𝑛𝑖𝑡 𝑃3.10 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡 = 𝑃25,000 + ∙ 10,000𝑢𝑛𝑖𝑡𝑠 = 𝑃56,000 𝑢𝑛𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝑃7,123.02 + 𝑃45,000 + 𝑃102,500 + 𝑃56,000 = 𝑷𝟐𝟏𝟎, 𝟔𝟐𝟑. 𝟎𝟐 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑜𝑓𝑖𝑡 = 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝐶𝑜𝑠𝑡 = 𝑃250,000 − 𝑃210,623.02 = 𝑷𝟑𝟗, 𝟑𝟕𝟔. 𝟗𝟖 𝐴𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑃39,376.98 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 = = ∙ 100% = 𝟐𝟔. 𝟐𝟓% 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑃150,000 Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝑃25 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 = ∙ 𝑋 𝑢𝑛𝑖𝑡𝑠 = 𝑷𝟐𝟓𝑿 𝑢𝑛𝑖𝑡 𝑃150,000 − 𝑃25,000 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 10 0.12 = 𝑃7,123.02 1 + 0.12 −1 𝑃4.50 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑐𝑜𝑠𝑡 = ∙ 𝑋 𝑢𝑛𝑖𝑡𝑠 = 𝑃4.50𝑋 𝑢𝑛𝑖𝑡 𝑃10.25 𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 = ∙ 𝑋 𝑢𝑛𝑖𝑡𝑠 = 𝑃10.25𝑋 𝑢𝑛𝑖𝑡 𝑃3.10 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡 = 𝑃25,000 + ∙ 𝑋 𝑢𝑛𝑖𝑡𝑠 = 𝑃25,000 + 𝑃3.10𝑋 𝑢𝑛𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝑷𝟑𝟐, 𝟏𝟐𝟑. 𝟎𝟐 + 𝑷𝟏𝟕. 𝟖𝟓𝑿 𝐼𝑛𝑐𝑜𝑚𝑒 = 𝐶𝑜𝑠𝑡 𝑃25𝑋 = 𝑃32,123.02 + 𝑃17.85𝑋 32,123.02 𝑋= = 𝟒, 𝟒𝟗𝟐. 𝟕𝟑~𝟒, 𝟒𝟗𝟑 𝒖𝒏𝒊𝒕𝒔 25 − 17.85 Decisions Recognizing Risk and Decisions Admitting Uncertainty
1-2] Referring from the previous problem (Problem 1-1),
if there is uncertainty as to the selling price per unit, determine the rate of return if the price per unit is (a) P23.00, (b) P23.50, (c) P24.00 and (d) P24.50. Decisions Recognizing Risk and Decisions Admitting Uncertainty For 5,000 units
𝑃230,000 𝑃235,000 𝑃240,000 𝑃245,000 Annual Profit − 𝑃210,623.02 − 𝑃210,623.02 − 𝑃210,623.02 − 𝑃210,623.02 = 𝑃19,376.98 = 𝑃24,376.98 = 𝑃29,376.98 = 𝑃34,376.98 𝑃19,376.98 𝑃24,376.98 𝑃29,376.98 𝑃34,376.98 ∙ 100% ∙ 100% ∙ 100% ∙ 100% Rate of Return 𝑃150,000 𝑃150,000 𝑃150,000 𝑃150,000 = 12.92% = 16.25% = 19.58% = 22.92% Decisions Recognizing Risk and Decisions Admitting Uncertainty For 5,000 units: Manufacturing the new product is not worthwhile if only 5,000 units can be sold annually at the given prices.
For 7,000 units:
For the production of 7,000 units sold at the given reduced prices, the new product should not be manufactured since the rates of return as calculated are all less than the required rate of 12%.
For 10,000 units:
For a production of 10,000 units annually, the company can afford to reduce the selling price to P23.00 per unit. Decisions Recognizing Risk and Decisions Admitting Uncertainty
1-3] Using the previous problem (Problem 1-1), if there
is uncertainty as to the economic life of the equipment, determine the rate of return if the economic life is (a) 5 years, (b) 7 years and (c) 9 years. Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝐹𝑜𝑟 5 − 𝑦𝑒𝑎𝑟 𝑙𝑖𝑓𝑒: 𝑃150,000−𝑃25,000 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 0.12 = 𝑃19,676.22 1+0.12 5 −1
2-1] To control excessive seepage in a mining tunnel, the
company has to install several pumps. Pump A costs P32,000 and pump B costs P21,000. It is estimated , however, that the annual operation cost for pump A would be P2,500 less than that for pump B. These pumps are expected to have no salvage value when they are replaced. There is considerable uncertainty as to the length of time the pumps will be needed. Prepare a sensitivity analysis to determine which pump will be more economical if the economic life is (a) 4 years, (b) 6 years and (c) 8 years. Capital invested by the company should earn at least 15% rate of return. Decisions Recognizing Risk and Decisions Admitting Uncertainty 𝐹𝑜𝑟 4 − 𝑦𝑒𝑎𝑟 𝑙𝑖𝑓𝑒: 𝐴𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑣𝑖𝑛𝑔𝑠 𝑜𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠 = 𝑃2,500 𝑃11,000 𝐴𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑛 𝑝𝑢𝑚𝑝 𝐴 = 0.15 = 𝑃2,202.92 1+0.15 4 −1 𝑃2,500−𝑃2,202.92 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑑𝑑 ′ 𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = ∙ 100% = 𝟐. 𝟕𝟎% 𝑃32,000−𝑃21,000 𝐹𝑜𝑟 6 − 𝑦𝑒𝑎𝑟 𝑙𝑖𝑓𝑒: 𝐴𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑣𝑖𝑛𝑔𝑠 𝑜𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠 = 𝑃2,500 𝑃11,000 𝐴𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑛 𝑝𝑢𝑚𝑝 𝐴 = 0.15 = 𝑃1,256.61 1+0.15 6 −1 𝑃2,500−𝑃1,256.61 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑑𝑑 ′ 𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = ∙ 100% = 𝟏𝟏. 𝟑𝟎% 𝑃32,000−𝑃21,000 𝐹𝑜𝑟 8 − 𝑦𝑒𝑎𝑟 𝑙𝑖𝑓𝑒: 𝐴𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑣𝑖𝑛𝑔𝑠 𝑜𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠 = 𝑃2,500 𝑃11,000 𝐴𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑛 𝑝𝑢𝑚𝑝 𝐴 = 0.15 = 𝑃801.35 1+0.15 8 −1 𝑃2,500−𝑃801.35 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑑𝑑 ′ 𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = ∙ 100% = 𝟏𝟓. 𝟒𝟒% 𝑃32,000−𝑃21,000 𝑼𝒔𝒆 𝒑𝒖𝒎𝒑 𝑨 𝒇𝒐𝒓 𝟖 𝒚𝒆𝒂𝒓𝒔 𝒐𝒓 𝒎𝒐𝒓𝒆, 𝒇𝒐𝒓 𝒔𝒉𝒐𝒓𝒕𝒆𝒓 𝒍𝒊𝒗𝒆𝒔 𝒖𝒔𝒆 𝒑𝒖𝒎𝒑 𝑩. Decisions Recognizing Risk and Decisions Admitting Uncertainty