Compare and contrast decision making under uncertainty, risk and certainty
What will be an ideal response?
• In decision making under certainty, it is assumed that complete knowledge is available so that the decision maker knows exactly what the outcome of each course of action will be (as in a deterministic environment).
• In decision making under uncertainty, the decision maker considers situations in which several outcomes are possible for each course of action. In contrast to the risk situation, in this case, the decision maker does not know, or cannot estimate, the probability of occurrence of the possible outcomes. Decision making under uncertainty is more difficult than decision making under certainty because there is insufficient information.
• In decision making under risk (also known as a probabilistic or stochastic decision making situation), the decision maker must consider several possible outcomes for each alternative, each with a given probability of occurrence.
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