Decision Making Condition & Example

Topics: Decision making, Decision theory, Risk Pages: 11 (3611 words) Published: February 9, 2013
1.1 Introduction

Decision Making is very important thing that we do in everyday lives. According to Harris, R (2010), decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker and making a decision implies that there are alternative choices to be considered. In addition, we are not on to identify as many of those alternatives as possible but to choose the one that has the highest probability of effectiveness. Just as there are different types of decision, there are also different approaches to decision making that are appropriate in different situation. Some decisions are made logical and rational thinking, while others are made using experience and sometimes based on the performance of a practiced skill. Decision making also can be described as the act of choosing one alternative from among a set of alternatives available. The decision making process includes recognizing and defining the nature of a decision situation, identifying alternatives, choosing the best alternative, and putting it into practice.

In the decision making environment, there are three categories that is decision in certain condition, in uncertain condition and also in risky condition. The certain condition in making decision is where we have confidence and belief to get the best outcome in a single answer. The decisions maker also have to gain the comprehensive information regarding the situation occur in order to assist in his/her decision making. Meanwhile, uncertain condition in making decision is when the decision maker does not have knowledge of information where it is impossible to accurately describe for future outcome, more than one possible outcome. The decision maker also needs to have a high tendency towards risks to make the decision. Risky condition in making condition is where the decision maker has very limited of information and as a result, it is hard for them to predict the outcome. This risky condition can only be assumed based on information provided and probability that situation will occur and whether the situation really happen or otherwise cannot be completely ascertained as suggested by Shahrul A.A. et al (2011). He also said that decision maker or manager has limited information to assist in making the decision in risky condition even though the information obtains is not complete. In this topic, we will analyze the three conditions in decision making environment, examples for each category and also conclusion for the topic.

2.0 Decision Making in Certain Condition

Decision making in certain condition implies that we know with 100 percent accuracy what the states of nature will be and what the expected payoffs will be for each state of nature. Harold. K(2009). He also believed that decision making under certainty is the easiest case to work with because with certainty, decision maker assume that all of the necessary information is available to assist them in making the right decision, and their can predict the outcome with a high level of confidence. This condition is ideal for problem solving and it is simply to study the alternatives and choose the best solution. Decision making in certain condition also occur when we know all information about alternatives and the best chosen one is the most effective.

Meanwhile, Dr. John Bukowski (2012), believed that one method we can use to help decide is the cut-off screening method. Here, the decision maker predetermines a cut-off for each criterion. Then, the decision maker goes through each criterion and eliminates any choices that don't meet the cutoff. If more than one choice remains, the decision maker could consider additional criteria or restrict the cutoffs. If all choices have been eliminated, the decision maker can relax the cutoffs.

2.1 Example of Decision Making in Certain Condition

There are several examples using the certainty condition in different kind of situation. One of the...

References: Geoffrey Churchill, Thomas Whalen. (1999). Robinson College of Business Georgia State University: Decisions under Uncertainty. Retrieve at [16 November 2012]
Harris, R
Harold Kerzner. (2009). Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Tenth Edition. John Wiley & Sons Publisher. [5 November 2012]
Hossein Arsham
John F. Bukawski. (2012). Quantitative Reasoning, by Alicia Sevilla and Kay Somers, ISBN 1-931914-90-7 . Retrieved at [4 November 2012]
Keltie, Denise
Kiker G.A. et al. (2005). Application of Multicriteria Decision Analysis in Environmental Decision Making. Integrated Environmental Assessment and Management, 1(2), pp. 95–108.[4 November 201]
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Rowe, W. (1988). An Anatomy of Risk. R.E. Krieger Publishing Company [10 November 2012]
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Sharaf N. Rehman.(2012). Decision-making Under Conditions of Uncertainty: The American Association of Behavioral and Social Sciences Journal.(The AABSS Journal, 2012, Volume 16).[5 November 2012]
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