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Home→The Westburn Dictionary of Marketing→D→decision-making under uncertainty

decision-making under uncertainty

Definition:
The making of decisions under conditions where the decision-maker has little or no prior experience and so cannot assign objective probabilities to the possible outcomes identified by his analysis and incorporated in his DECISION TREE. To address problems of this kind, a new school of decision theorists has emerged since the late 1950s (led by Raiffa and Schlaifer at the Harvard Business School) which emphasizes the role of probability in decision-making and the use of Bayes Theorem as a means of combining prior estimates with new information to generate a set of revised or posterior probabilities.

Cross-References:
[decision tree]

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© Westburn Publishers Ltd 2002, The Westburn Dictionary of Marketing edited by Michael J Baker, ISBN 978-0-946433-01-8. www.themarketingdictionary.com. Entry: [Michael J. Baker], [1998].