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Define the concepts risk and ambiguity

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Reference no: EM132125188

Risk versus ambiguity

a. Define each of the concepts risk and ambiguity (sometimes called Knightian uncertainty).

b. Provide a simple example that incorporates risk in monetary payoffs but not ambiguity.

c. Describe a situation from real life (not an experiment) that incorporates both risk and ambiguity.

Reference no: EM132125188

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