Please enable JavaScript.

Coggle requires JavaScript to display documents.

5.4 & 5.5 - Coggle Diagram

- - - - Expected life span of a spare part
    - - Negotiations
    - - e.g. oil prices, stock prices, the weather behavior, etc.
      - The output of complex systems
      - The behavior of a hired employee
      - The further we look into the future, the greater the uncertainties become
    - - Too many information is not always a good thing
      - With more information, the likelihood of conflicting information increases and thus introduces more uncertainty. This creates another layer of decision making, that is deciding which information to use to make a decision
  - - - External Uncertainties
        
        Indeterminacy of external events
      - Internal Uncertainties
        
        Limitations of the DM knowledge
    - - ontological uncertainty
      - epistemological uncertainty
    - - Aleatory Uncertainties
        
        Irreducible
        
        Caused by the inherent variation and randomness of systems
        
        Fishburn (1994), suggested that greater knowledge allows us to accurately quantify aleattory uncertainty in terms of probabilities and distributions
        
        Cannot be removed
      - Epistemic Uncertainties
        
        Reducible
        
        Comes from the limitation of human knowledge
        
        With greater knowledge, epistemic uncertainty can be reduced and possibly removed
        
        Removable
        
        the decision makers' ability (or inability) to make adequate sense of things and foresee the consequences of their potential action
      - Science and human progress can be seen as an ongoing process of mitigating the impact of aleatory uncertainty by cumulatively reducing epistemic uncertainty.
- - - - Emerges when an individual cannot predict the future impact of an event that just occurred or imagined
    - - Related to the DM ability to formulate alternative options and decide which one to select to tackle the situation at hand
      - Two elements:
        
        Determine the possible options
        
        Selecting the appropriate one
    - - Uncertainty concerned with events and trends in the external environment and how it is perceived by the individual
      - A form of epistemic uncertainty
      - It related to the individual's ability to understand and comprehend what is actually happening around them
      - If the external environment is well understood, the uncertainty is LOW. if not, it is HIGH
      - It could be due to conflicting information or cognitive limited capacity
  - - - Creates Novel Stimulus (Bosma et al., 2016)
      - Create surprises, unexpected events and outcomes
      - Helps people to be imaginative, creative and entrepreneurial, find solutions to unexpected problems