Single Person Decision Making under Uncertainty

If there is no uncertainty, there is no role for information. Hence, any examination of the role of accounting information in markets and organizations must recognize that decision makers face uncertainty about the consequences of their actions. In this chapter we summarize some key elements of the representation of uncertainty and decision maker preferences under uncertainty. The representation of information and its decision-facilitating role is introduced in Chapter 3. Chapters 2 and 3 consider settings with a single decision maker, while Chapter 4 considers a setting with multiple decision makers, and it introduces the key concepts of efficient risk sharing, and congruent preferences over actions.