Proceedings of The 6th International Conference on Business, Management and Finance
Making Decisions Under Uncertainty: A Conceptual Framework
This paper presents a conceptual framework that summarizes existing approaches and theories related to decision-making under uncertainty. The paper focuses on the process of decision-making, how all its parts should be combined, and how they should be reflected in decision rules. Although this topic is not new, techniques for making decisions and managing uncertainty have improved significantly over the past fifty years, alongside the development of probability theory and fuzzy set theory. The paper aims to bring together the main components of the decision-making system, including the concept of uncertainty, different ways of thinking, creating models, and approaches to decision-making. These issues are examined in their dialectical relationship. Instead of providing detailed explanations of each technique, the presentation seeks to explain their essence and practical applicability. In addition to data-driven decision-making, the presentation also explores non-quantitative methods.
keywords: risk, probability, Bayesian, fuzzy sets, decision theory, prospect theory