Making Business Decisions under Uncertainty: a Comprehensive Framework1
This paper synthesises theoretical and methodological advancements in decision- making under uncertainty, with a focus on integrating the core components of the decision-making system. While prior literature has extensively explored individual facets of uncertainty management, this work centres on elucidating the decision- making process itself, particularly synthesising its constituent components and their operationalization into coherent decision rules. Building on foundational progress in probability theory and fuzzy set theory over the past century, we propose a comprehensive framework that unifies four interrelated dimensions: (i) conceptualizations of uncertainty, (ii) cognitive strategies for reasoning under uncertainty, (iii) model construction methodologies, and (iv) decision-making techniques. The analysis culminates in examining sustainability uncertainty, emphasizing its dialectical interplay with decision-making paradigms. Though the paper refrains from granular technical discussions of individual components, it prioritizes articulating the framework’s theoretical coherence and practical utility. By bridging data-driven quantitative approaches with qualitative, context-sensitive strategies, this study advances a holistic perspective for navigating uncertainty, offering insights for researchers and practitioners in fields requiring adaptive decision- making systems.
Keywords: Uncertainty, Risk, Probability, Fuzzy sets, Metaphor, Narrative, Decision Theory, Expected Utility Theory, Prospect Theory, Possibility Theory, Real Options
