4.1.2 Attitudes towards uncertainty

Uncertainty exists when we know that several different outcomes could occur, but we do not have estimates of the probability of each of these outcomes happening. In this scenario, there are several rules we can use to guide our decision making called: maximax, maximin, and minimax regret. Minimax is loosely equivalent to being risk averse, since it seeks to minimise the worst outcome that could occur. Maximax is roughly similar to being risk seeking, since it seeks to maximise the best outcomes that occur.