Decision making under certainty, uncertainty and risk

a. Certainty
i. People are sure about what will happen when they make a decision.
ii. The information available is reliable, & the cause & effect relationships are known.
b. Uncertainty
i. Information available is meagre.
ii. Reliability of data is not certain.
iii. Moreover one does not know the impact of different variables
c. Risk
i. Information is incomplete.
ii. To arrive at a decision, one may use an estimate of objective probability example: mathematical models.
iii. Or use subjective probability, based on judgment & experience.
iv. It is important to know the size & nature of the risk involved.