If you wait for a better offer, then your payoff probability distribution becomes:
If you take the job offer at hand, your possible outcomes can be summarized in the following payoff table with the probability distribution. So, in this case, the risk profile is:īy looking at the risk profiles, the decision-maker can tell a lot about the riskiness of the alternatives.įor example, consider the following decision tree. In that way, a decision-maker can get an in-depth view of the comparative payoffs/losses along with probabilities. Thus, a risk profile is basically a probability distribution. Item A = 20$, Item B = 15$ (0.5 * 0.5 = 0.25 probability)Īs a project manager, you want to understand the possible range of total costs, along with their probabilities, which we call "Risk Profile." A risk profile is displayed as a graph with the consequence values along the x-axis and their associated probabilities along the y-axis. So, there can be four possible scenarios, Item B can cost either 5$ or 15$ (0.5 probabilities). Item A can cost either 10$ or 20$ (0.5 probabilities). You will have to buy two items for the project, Item A and Item B. Think about a project where you are the project manager.
0 kommentar(er)
