ABSTRACT
We have thus far assumed that the payoffs from alternative pure-strategy profi les were known with certainty. In fact, the choice of strategies often involves situations in which outcomes are uncertain and where decisions must be made with less than complete information. Many business decisions are made under a cloud of uncertainty. In most cases, managers do not know how the public will react to the introduction of a new product line, or how fl uctuations in macroeconomic activity, shifting consumer tastes, the behavior of rival companies, changes in resource availability, changes in input prices, labor unrest, political instability, and so forth will affect sales, revenues, and profi ts. On the other hand, experience and market or economic analyses may make it possible to reduce uncertainty by assigning probabilities to each possible outcome.
