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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