Discrete Probability

When hearing or reading the word risk, what comes to your mind? Most people associate risk with the chance that something bad will happen. Some decision analysts use the term risk or the term chance when the unknown outcome has a discrete outcome associated with it: yes or no, success or failure, zero or one. A coin flip has a discrete outcome with a 50% chance of success for either side (heads or tails) of the (presumably honest) coin. Discrete outcomes are always assessed as a percentage (i.e., a number between zero and one), never a range.

For example, weather forecasters assign a percentage for the chance of rain (e.g., 30%). What the percentage means is that, when weather conditions are like they are now, on average ...

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