Decision Making under Uncertainty

In real life situations, most of the times, it is not possible to estimate the probabilities of various environmental states and its parameters and hence, of the system's response. Such situations are akin to taking decision under uncertainty. 

For each alternative strategy, the various responses are guesstimated for different environmental states. This guesstimate is often achieved by simulation of the stochastic environment. These guesstimates are then presented in o tabular form called "pay-off matrix" or "Decision-matrix" which helps in selecting a "feasible" and "optimal" alternative on the basis of a predetermined evaluation criterion.