Why interviewers ask this question
Very few real decisions are made with complete information, so this question tests whether you can make sound, defensible progress despite genuine ambiguity, rather than becoming stuck or making an uninformed guess. Interviewers want to see a structured approach to filling gaps where possible and making a reasoned judgement call where they cannot be filled in time.
How to structure your answer using STAR
Choose a real example where you genuinely lacked information needed to proceed confidently, ideally under some time pressure. Briefly explain the situation and what was missing, then focus the action on how you handled the gap: seeking out the most reliable available information quickly, making reasonable assumptions explicitly rather than silently, and building in a way to adjust if those assumptions turned out to be wrong. Close with a clear result.
A strong example answer
"I needed to plan a project timeline before a key stakeholder had confirmed their team's availability, and waiting for confirmation would have delayed the whole plan. I built the timeline around a clearly stated, reasonable assumption about their likely availability based on past patterns, flagged that assumption explicitly to everyone involved, and built in a short buffer specifically to absorb the risk if the assumption was wrong. The assumption turned out to be close to accurate, and having a stated plan early let other teams start their own preparation instead of waiting on us."
Mistakes to avoid
Avoid an answer where you simply guessed without communicating that you were doing so, since silently proceeding on unstated assumptions is a real risk, not good practice. Avoid a story where you became stuck waiting for perfect information instead of making reasonable progress, since the question is testing your ability to move forward under genuine uncertainty.