Managerial Decision Making Under Risk and Uncertainty

Abstract

Abstract—This paper focuses on managerial decision making under risk and uncertainty. Since no one, so far, has studied managers ´ risk attitudes in parallel with their actual behavior when handling risky prospects the area still remains relatively murky. Interviews have been done with 12 managers in the Swedish forest industry concerning how they define risk, how they handle risk, how they make risky decisions, and how the organizational context affects the decision-making process. Problems that have been identified in this study are the lack of information and precise objective data, that risk and probability estimations made by the managers are often based on inadequate information and intuition, that no formal analysis is carried out, that no computer based decision tools are used in the decision making processes, and therefore most decisions are based on intuition and gut feeling. Index Terms—Risk taking, decision making, computer based decision tools.