ABSTRACT
In real-life decision situations, it is rather unusual for there to be no information available at all on the probabilities involved. Therefore, it seems to be a plausible extension to the most simplistic decision rules to try to incorporate more of the information actually available into the decision process. In this chapter, we take a closer look at some more of the constituent components of modern rational decision-making and elaborate on them. We begin with the concepts of probability and utility (or value) which, when combined, make up the expected utility/value. Any event that is not certain to occur is a matter of some uncertainty. When a decision-maker has to act in situations where uncertainty prevails, and this uncertainty can be quantified in terms of a probability, it is said that the decision is made under risk, also called Bayesian decision theory.
