ECONOMICS

Detailed explanation-1: -Making decisions under certainty is easy. The cause and effect are known, and the risk involved is minimal. What’s tough is making decisions under risk and uncertainty. The outcome is unpredictable because you don’t have all the information about the alternatives.

Detailed explanation-2: -But decision making under both conditions of uncertainty and risk are distinguishable. In making decisions under risk, you can predict the possibility of a future outcome. But when making decisions under uncertainty, you cannot. Risks can be managed while uncertainty is uncontrollable.

Detailed explanation-3: -During certainty, your decisions and plans will not affect you or your business, but it is more vital to look at decisions taken when in uncertainty or huge risk, as it affects the performance and credibility of your firm.

Detailed explanation-4: -Decisions are made under the condition of certainty when the manager has perfect knowledge of all the information needed to make a decision. This condition is ideal for problem solving. The challenge is simply to study the alternatives and choose the best solution.