Elaborate the concept of "Decision making under Uncertainty" from Managerial perspective

Decision making under uncertainty is a fundamental concept in the field of management. It refers to the process of making decisions where the future outcomes or states of nature are unknown. Here are the steps to elaborate this concept:

1. Understanding the Concept: The first step is to understand what decision making under uncertainty means. In the world of business, managers often have to make decisions without having complete information about the outcome. This is known as decision making under uncertainty.

2. Types of Uncertainty: There are two types of uncertainty - risk and ambiguity. Risk refers to situations where the probabilities of outcomes are known, but the actual outcome is not. Ambiguity, on the other hand, refers to situations where the probabilities of outcomes are not known.

3. Decision Making Models: There are several models that managers use to make decisions under uncertainty. These include the Maximin, Maximax, Laplace, and Hurwicz criteria. Each of these models has its own strengths and weaknesses, and the choice of model depends on the manager's risk tolerance and the specific situation.

4. Role of Intuition and Experience: While these models can guide decision making, they are not the only factors that managers consider. Managers also rely on their intuition and experience when making decisions under uncertainty. They may use their past experiences to estimate the probabilities of different outcomes, and they may use their intuition to make decisions when the models are inconclusive.

5. Importance of Decision Making under Uncertainty: Decision making under uncertainty is a critical skill for managers. It allows them to make informed decisions even when they do not have all the information they would like. This can help them to navigate complex business environments and to respond effectively to unexpected events.

6. Limitations and Challenges: Despite its importance, decision making under uncertainty also has its limitations and challenges. It requires managers to make estimates and assumptions, which can be difficult and can introduce errors. It also requires them to balance the need for quick decisions with the need for accurate decisions, which can be a challenging trade-off.

In conclusion, decision making under uncertainty is a complex but essential part of management. It involves making informed decisions based on incomplete information, using a combination of decision models, intuition, and experience. Despite its challenges, it is a skill that can greatly enhance a manager's effectiveness.