Subjective probability expresses an individual’s degree of belief about the chance that an event will occur. These subjective probabilities are used in certain management decision procedures.
We can understand the subjective probability concept by using the concept of fair bets. For example, if I assert that the probability of a stock price rising in the next week is 0.5, then I believe that the stock price is just as likely to increase as it is to decrease. In assessing this subjective probability I am not necessarily thinking in terms of repeated experimentation, but instead I am thinking about a stock price over the next week.
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