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 ?
Nevertheless, Wittgenstein regards the loss of a certainty as "madness" (OC [section] 281), resulting in the impossibility of being certain of any judgment (cf.
b) can have diachronic changes in probabilities even if the certainty set does not change
I think, you know, basically we want more certainty in our life, and not uncertainty.
Specialties include: Online Training, Instructor-Led Training (ILT), Web-Based Training (WBT), Mobile Learning, E-learning, Learner Certainty Assessment (LCA), Blended Learning, Percolate Learning Management System (LMS), Online Help, Technical Writing
According to Smith and Ellsworth, within appraisal dimensions responsibility, control, motive consistency, pleasantness, and certainty can be discerned to provide important distinctions; and specific emotions are associated with particular sets of appraisals.
For instance the performance of BOOT system on speed and cost certainty is good (an index of 3) on all cost categories.
Certainty chairman Kevin Martin, a former Law Society president, said: "We believe Certainty is the first organisation to actually provide a compliant solution to the chronic problem of will registration.
However, Certainty, for all its ambition and complexity, is thin.
Second, philosophers have asked about the certainty that seems to be characteristic of knowledge.
Strachan pointed to the FSA's current effort to bring contract certainty to the London market by the end of 2006.
Consequently, the London market is undergoing a transformation, starting with contract certainty.
WINNER OF BOTH the Pulitzer Prize and the Tony Award, and selling out nightly on Broadway, Doubt presents four unforgettable characters caught in an intriguing detective story, a collision with faith and morals and a journey to the uneasy spaces between certainty and fear.