The purpose of this chapter was to demonstrate the concepts and fundamentals of decision making when uncertainty exists. Within this context, several decision-making criteria were presented. The maximax, maximin, minimax regret , equal likelihood , and Hurwicz decision criteria were demonstrated for cases in which probabilities could not be attached to the occurrence of outcomes . The expected value criterion and decision trees were discussed for cases in which probabilities could be assigned to the states of nature of a decision situation.
All the decision criteria presented in this chapter were demonstrated via rather simplified examples; actual decision-making situations are usually more complex. Nevertheless, the process of analyzing decisions presented in this chapter is the logical method that most decision makers follow to make a decision.