When is it appropriate to use prediction when making decisions?

Using prediction in decision-making is most appropriate when uncertainty is low and you expect the future to resemble the past. This situation allows for the application of historical data and established patterns because the assumption is that past trends will continue into the future.

In scenarios where the future is better understood or where conditions are stable, predictions based on historical data can be more reliable and suitable for guiding decisions. For instance, if a business has consistently experienced stable sales in a specific market under similar conditions, it is reasonable to predict that future sales will follow a similar trend.

In contrast, predicting in uncertain environments, such as when the future is unknown and full of possibilities, can lead to inaccuracies because there are many variables at play. Similarly, if you are attempting to innovate in a new market or analyze historical data merely for trends without a clear expectation of those trends continuing, the reliability of predictions diminishes, making it harder to make informed decisions.