Decision Making Alternatives Discussion

Question Description


Discuss the differences among decision making under certainty, decision making under risk, and decision making under uncertainty.

First Post:

  • Respond to the question thoroughly. This is a formal assignment with a minimum of 200-250 words.
  • It should include at least one reference from relevant peer-reviewed journal articles and/or books found within the online LIRN library or other reputable sources.
  • These must be properly cited in APA format. Remember you can also use your textbook.
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Second and Third Posts:

  • Reply to at least two classmates’ posts. Your response to your classmate’s discussion needs to be substantive, meaning it should add something new to the original comment, including a level of depth that enriches the discussion (i.e. reflecting on their response, applying their comment to the workplace, the literature, etc.).
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Employing mathematical measures is a great way to give a quantitative indicator during the decision-making process.

When approaching an issue with certainty, it is the easiest case but rare. Managers can simply obtain the result based on certain factors as long as all of them are identified correctly.

However, in the real world, most business cases come with uncertainty and risks. The decision making with uncertainty refers to that the decision-makers might not know the probabilities of the outcomes. It is the moment to look into five possible outcomes or a few of them, Maximax (optimistic), Maximin (pessimistic), Criterion of realism (Hurwicz), Equally likely (Laplace), and Minimax regret.

In a better scenario, the probability of each state of nature can be measured in quantity. Decision-makers would be able to have some visibility to an estimated monetary value. When building the model, managers should firstly find all related states of nature and the associated probability. By sum producting each pair of them, the number at the end of the equation could be used to compare the outcome of other scenarios.

From a more realistic perspective, the decision-making that comes with certainty barely exists, especially for large projects or investment. In other words, managers are required to identify as many variables or states of nature as possible.


According to Render et al. (2017), there are three decision-making environments, and these types of decisions depend on how much knowledge or information people have about the situation. The three decision-making environments are decision making under certainty, decision making under uncertainty, and decision making under risk.

In the environment of decision making under certainty, the factors that decision-makers face are determined. “Decision makers know with certainty the consequence of every alternative or decision choice” (Render et al., 2017, p. 65). That is, while making the decision, all alternatives are clear and outcomes for every alternative is clear. Among all the decision-making environments, this is the most ideal situation for decision-makers, where decision-makers can make the best decision under certainty and determine their actions that can fulfill the best decision.

In the real world, decision making under certain is rare and decision making under risk is more common than the previous situation. In decision making under risk, each alternative has several possible outcomes, and the decision-maker knows the probability of occurrence of each outcome (Render et al., 2017). In this environment, decision-makers can estimate the probability of each outcome under each alternative and select the best decision based on the probability.

The third decision-making environment, decision making under uncertainty, comes with the most complicated and changing environment. Render et al. (2017) argue that in this environment of decision making under uncertainty, “there are several possible outcomes for each alternative, and the decision-maker does not know the probabilities of the various outcomes” (p. 65). Apparently, this environment is the one with the highest uncertainty, where the situation that decision-makers face involves some unknown conditions of which the probability cannot be predicted.

Compared the three decision-making environments with each other, the most significant difference comes from the level of uncertainty associated with the decision-making situation. From decision making under certainty, to under risk, and finally to under uncertainty, the degree of uncertainty gradually increases while the predictability of outcomes for each of the alternative decreases. As mentioned above, the decision-making under certainty barely exists in our complicated real life. Therefore, for decision-makers, in each decision-making scenario, they need to fully evaluate the situation and identify as many variables or states of nature as possible, in order to make better decisions.


Render, B., Hanna, M. E., Stair, R. M., Hale, T. S. (2017). Quantitative Analysis for Management. United Kingdom: Pearson.

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