Decision Making Under Uncertainty

This report introduces concepts, principles, and approaches for addressing uncertainty in decision making. The sources of uncertainty in decision making are discussed, emphasizing the distinction between uncertainty and risk, and the characterization of uncertainty and risk. The report provides a brief overview of decision theory and presents a practical method for modeling decisions under uncertainty and selecting decision alternatives that optimize the decision maker's objectives. The decision modeling methods introduced in this paper are suitable for both data-rich and data-poor decision environments. This report describes how to analyze the sensitivity of a decision model to improve understanding of the decision problem and build confidence in the conclusions of an analysis. Principles of adaptive management and adaptive engineering are discussed from a decision analysis perspective. Examples are provided to demonstrate how these methods could be applied within the U.S. Army Corps of Engineers. The original document contains color images.