Making decisions in an atmosphere of increasing time pressure, uncertainty, and conflicting expert opinions creates challenges for any manager. Making such leadership decisions in crisis situations is eve more demanding.
FOLLOWING ARE IMPORTANT TYPES OF DECISION MAKING
1.Decision making under certaintyIn this case, you (the decision maker) have all the information of the consequence of every alternative or decision choice with certainty. In other words, under certainty we can predict the outcome of each alternative course of action exactly.
2.Decision making under Risk.In this case, you (decision maker) knows the probability of occurrence of each outcome.
2.Decision making under Risk.In this case, you (decision maker) knows the probability of occurrence of each outcome.
3.Decision making under uncertainity
Uncertainty refers to the situation in which you do not have any knowledge about the probability of occurrence of any of occurrence any state of nature. Under uncertainty, it is impossible to estimate the probabilities of the various possible outcomes.
4.Decision Making under conflict.
A condition of conflict exists when the interest of two or more decision makers compete.
difference between decision making under risk and uncertainty in statistical decision theory.
Decision making under risk In this case more than one states of nature exist and there is enough information available to assign probability to each of the possible state.
Decision making under uncertainty : Here more than one state of nature exists but there is no information about the various states, not even sufficient knowledge to assign probabilities to them.
Decision making under uncertainty
1 Criterian of optimism
2. Criterian of pessimism.
3. Minimax regret criterion.
4. Criterion of realism.
5. Laplace criterion.
Decision making under risk:
1. Expected value criterion
2 Expected opportunity loss criterian
3 Expected value of perfect mformation
4. Use of incremental analysis.
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