Which of the following statements are true regarding the relationship between uncertainty, information and risk?Uncertainty increases with increase in experienceUncertainty reduces if the amount and quality of information is lowHigh experience and large amount of information results in less uncertaintyUncertainty is independent of the given information in any situation
Question
Which of the following statements are true regarding the relationship between uncertainty, information and risk?Uncertainty increases with increase in experienceUncertainty reduces if the amount and quality of information is lowHigh experience and large amount of information results in less uncertaintyUncertainty is independent of the given information in any situation
Solution
The following statements are true regarding the relationship between uncertainty, information, and risk:
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Uncertainty reduces if the amount and quality of information is high, not low. The more information you have, and the better the quality of that information, the less uncertainty there is.
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High experience and large amount of information results in less uncertainty. This is because with more experience and information, you have a better understanding of the situation, which reduces uncertainty.
The following statements are false:
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Uncertainty increases with increase in experience. This is not true because as you gain more experience, you become more familiar with the situation, which reduces uncertainty.
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Uncertainty is independent of the given information in any situation. This is not true because the amount and quality of information you have can greatly affect the level of uncertainty. The more and better information you have, the less uncertainty there is.
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