preferences under uncertainty

Preferences under uncertainty refer to how individuals make choices when they are unsure of the outcomes. When faced with uncertain situations, people weigh potential risks and benefits, often relying on their beliefs, experiences, and subjective opinions. This can involve evaluating different options based on their likelihood and desirability. For instance, when choosing between investing in a stock or a savings account, one considers factors like potential returns, risks, and personal comfort with uncertainty. These preferences help individuals navigate decisions in everyday life, such as career choices, health risks, and financial investments, where outcomes are unpredictable.