CEVAP:

The first decision making environment is given as decision making under certainty. In this setting, the decision maker definitely knows, hundred percent sure, what will happen in the decision problem. Naturally, if the decision maker is hundred percent sure that which of the states of nature will be faced with, then choosing the best decision alternative is trivial. The decision with the best payoff value for the known state of nature is chosen and the decision making process is over. For example, a manager wants to build a new factory that cost the same in construction in two different cities, the cost of building the new factory is the same but one of the cities states that if the factory is built in their city they will give this company 5% tax deduction for each product produced and sold from the new factory, whereas the other city offers only 3% tax deduction. In this setting it is easy to see that the best decision alternative is to build the new factory in the first city offering 5% tax deduction on the assumption that all the other factors building a factory in these two different cities are the same.