Multi-criteria Decision-making in Management under Conditions of Risk and Uncertainty

Decision-making processes cross all sequential managerial functions. The quality of outcomes from these processes is decisive for the prosperity and viability of the managed (entrepreneurial) entity (unit). It depends on the quality of the information available and its use for making a decision. For the sake of decision-making process quality, a manager should not – particularly if the management of entrepreneurial entities is concerned –rely only on their experience and intuition when making a decision. They should not omit the possibility of obtaining information for decision-making by means of existing theoretical – methodological concepts, generalizing on an exact basis the formal-logical part of decision-making processes under various conditions. These conditions include situations when it is necessary to consider more criteria for decisionmaking with different weights, hierarchy and mutual relations, at various levels of certainty or risk and conditions when the probability of risk factor effects is only known up to the uncertainty, where the influence of randomly acting factors cannot be statistically “estimated”. In other words: The quality of managerial decision-making processes – particularly those with strategic relations, long-term influence on the efficiency of the managed entity, connected with terms such as “multi-criteria, risk and uncertainty” – can be significantly supported by using the theory of decision-making following, among other things, from the game theory situation analogy and strategic behaviour. The following text tries to specify in detail the above mentioned knowledge and document it in a simple example of investment decision-making.