In an essay of no less than three pages, explain (1) the criteria for decision-making under uncertainty and (2) decision-making under risk. What is the difference between these two “other-than-certainty” classifications?
The criteria for decision-making under uncertainty
In an essay of no less than three pages:
(1) the criteria for decision-making under uncertainty.
(2) decision-making under risk. What is the difference between these two “other-than-certainty” classifications? Include examples of each in the essay.
Be sure to provide research to support your ideas. Use APA style, and cite and reference your sources to avoid plagiarism
Decision making under Uncertainty example problems
A decision problem, where a decision-maker is aware of various possible states of nature but has insufficient information to assign any probabilities of occurrence to them, is termed as decision-making under uncertainty. A decision under uncertainty is when there are many unknowns and no possibility of knowing what could occur in the future to alter the outcome of a decision.
We feel uncertainty about a situation when we can’t predict with complete confidence what the outcomes of our actions will be. We experience uncertainty about a specific question when we can’t give a single answer with complete confidence.
Launching a new product, a major change in marketing strategy or opening your first branch could be influenced by such factors as the reaction of competitors, new competitors, technological changes, changes in customer demand, economic shifts, government legislation and a host of conditions beyond your control. These are the type of decisions facing the senior executives of large corporations who must commit huge resources.
The small business manager faces, relatively, the same type of conditions which could cause decisions. This may result in a disaster from which he or she may not be able to recover.
A situation of uncertainty arises when there can be more than one possible consequences of selecting any course of action.