certainty equivalent

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Certainty equivalent

An amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher, but uncertain, amount.

Certainty Equivalent

A small, zero-risk return an investor may trade for a larger potential return with an associated risk. Companies offer certainty equivalent returns on certain investments and use their demand to determine the level of risk an investor will accept for a given return from the company.

certainty equivalent

The minimum sum of money a person would accept to forgo the opportunity to participate in an event for which the outcome, and therefore his or her receipt of a reward, is uncertain. For example, suppose you are told to draw one card from a full deck of cards. If you draw a red card you win $100 and if you draw a black card you win nothing. If you would accept $40 to forgo the selection and possibility of winning, $40 is the certainty equivalent of the outcome of the event. Certainty equivalents are used in evaluating risk.

certainty equivalent

see DECISION TREE.
References in periodicals archive ?
In 2015, Emerson first introduced the opportunity for Top Quartile performance in capital projects with Project Certainty, a commitment to help the industry address a crisis in poor capital project performance.
Of course, I add, it is not in our power to separate life from death, but it might be a great relief for many people to share the certainty that they at least will not die in the short to medium term.
Voltaire said doubt is not a pleasant condition, but certainty is absurd.
Given this move from certainty to less-than-certainty and the assignment [P.
The answer to that question is beyond the realm of certainty for me--or for anyone.
Sherry believes Percolate's learner certainty feature is a game-changer in the learning management system (LMS) industry.
While industry often gets all the certainty government can deliver, no reciprocal certainty is provided to communities for social, cultural and environmental values.
And, while the decision has now been made, banding levels will be reviewed again in 2014, making it impossible to make investments with any certainty.
My understanding is that mathematical certainty is not always attainable--at least that is my reading of Godel's incompleteness theorem.
Small businesses want to lead the recovery of the North East economy but need more help from any future government by giving greater certainty on the public finances.
Keywords: certainty, uncertainty, judgment, coping strategy, cognitive appraisal.
What I said previously was that there would have to be certainty and clarity and there would appear to be greater certainty and clarity than was the case whenever I was speaking to you on Thursday night," he said.