ABSTRACT
Economists advocate marginal analysis and opportunity costing in the evaluation of decision alternatives. Decision theorists have tended to concentrate on the lack of certainty surrounding outcomes rather than the problem of discovering all alternative solutions to a particular problem. Risk refers to the situation in which the outcome of each strategy is not certain, but where the probabilities of the alternative outcomes can be determined. Coin tossing, die throwing and card drawing situations and games of chance in general all have the property of being solvable on an a priori basis. The nature of the game speaks for itself: we don't have to toss a coin under experimental conditions to appreciate that there is a fifty per cent chance of it falling heads. If decision theory were solely concerned with a priori probabilities, it would be very limited in its scope, and certainly business decision problems would be intractable.
