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Decision performance could be affected by uncertainties, such
as ambiguous probabilities, was previously pointed out by
various researchers. Furthermore, researchers stated that any
theory of decision weights must account for the effects of
ambiguity or vagueness about probabilities. However, in the
traditional models of engineering economy or capital budgeting,
some handle uncertainties with probabilities while others even
neglect them totally. In the traditional approach,
probabilities and/or other variables are treated as if they are
certain and suitable. Therefore, decisions based on
computations of these model are suspect because omission of
uncertainties may significantly affect decision performance.
Using an analytic approach, we develop a new mechanism for
taking uncertainties into account. It formally integrates
certainty factors with the traditional models of engineering or
capital budgeting to provide additional information for
evaluating the decision processes. This new approach not only
possesses the properties of the traditional approach, but also
endeavors to overcome shortcomings of the traditional approach.
An example is provided to illustrate the processes and results
of the traditional and new approaches.
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