Classical statistical decision making involves the notion that the uncertainty in the future
can be characterized probabilistically, as discussed in the introduction to this chapter.
When we want to make a decision among various alternatives, our choice is predicated
on information about the future, which is normally discretized into various “states of
nature.” If we knew with certainty the future states of nature, we would not need an
analytic method to assess the likelihood of a given outcome. Unfortunately, we do not
know what the future will entail so we have devised methods to make the best choices