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Which one of the following is NOT a rule for estimatings the subjective probability of outcomes of any decision ?1. Assessing utility2. Representativeness3. Availability4. Adjustment

Answer» Correct Answer - Option 1 : Assessing utility

The correct answer is Assessing utility.

  • Subjective probability measures the degree of belief in the likelihood of occurrence of a specific outcome.
    • It does not require any formal calculations and utility.
    • It is based on the subject's opinion and past experience.
    • It differs from person to person.
    • It contains a high degree of personal bias.
    • It is affected by a variety of beliefs of the person.
    • Example: An analyst may forecast the Sensex opening based on its past trends and current market scenario.

  • Objective probability is just the opposite of Subjective probability.
    • It is based on statistics, experiments, and mathematical experiments.
    • It is also called frequency probability.
    • Example: The probability of getting heads in a coin is 30% because if a coin is flipped often, It will result in heads 30% of the time.


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