Adding empirical uncertainty doesn’t change the picture: empirical uncertainty basically means you should draw fuzzy lines instead of precise ones, and it’ll be less clear when you hit the crossover.
If the uncertainty is precisely quantified (no imprecise probabilities), and the expected returns of each option depends only on how much you fund that option (and not how much you fund others), then you can just use the expected value functions.
Right. You’d have a fuzzy line to represent the confidence interval of ex post value, but you would still have a precise line that represented the expected value.
If the uncertainty is precisely quantified (no imprecise probabilities), and the expected returns of each option depends only on how much you fund that option (and not how much you fund others), then you can just use the expected value functions.
Right. You’d have a fuzzy line to represent the confidence interval of ex post value, but you would still have a precise line that represented the expected value.