Sample interview questions: How do you approach decision-making under uncertainty?
Sample answer:
Approaching Decision-Making Under Uncertainty
- Identify and Quantify Uncertainty:
- Determine the sources of uncertainty, such as economic conditions, market volatility, or technological advancements.
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Use statistical methods, historical data, or expert opinions to quantify the likelihood and magnitude of possible outcomes.
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Assess Risk and Reward:
- Evaluate the potential benefits and costs associated with each decision alternative.
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Consider the probability of success, the potential upside, and the downside risks.
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Develop Contingencies and Sensitivity Analysis:
- Plan for alternative courses of action in case of different outcomes.
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Conduct sensitivity analysis to assess how the decision outcome changes with variations in key assumptions.
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Use Decision Theory:
- Apply expected utility theory or other decision-theoretic frameworks to weigh the expected value of outcomes again… Read full answer
Source: https://hireabo.com/job/1_2_36/Financial%20Economist