Decision theory is the formal study of how choices are and ought to be made under conditions of uncertainty, risk or conflicting objectives, drawing on probability, logic and economics to model reasoned choice. Its normative branch, developed substantially through the work of mathematicians and economists including John von Neumann and Oskar Morgenstern in the 1940s, sets out axioms for rational preference and expected utility, while its descriptive branch studies how people actually decide, often departing from those norms. The field underlies modern statistics, economics, artificial intelligence and game theory.
Facts
Central QuestionWhat choice a rational agent facing uncertainty ought to make, as a prescriptive standard rather than a description of how people actually decide. 1 ScopeDecision theory is a branch of probability, economics and analytic philosophy that uses expected utility and probability to model how a rational individual would choose under uncertainty. 1 SignificanceDecision theory supplies the mathematical foundation used to model and analyze individual choice across sociology, economics, criminology, cognitive science, moral philosophy and political science. 1 Decision Theory
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1. Decision theory (Wikipedia)
WikipediaLead section, definition sentence
Decision theory or the theory of rational choice is a branch of probability, economics, and analytic philosophy that uses expected utility and probability to model how individuals would behave rationally under uncertainty.
Lead section, scope sentence
It differs from the cognitive and behavioral sciences in that it is mainly prescriptive and concerned with identifying optimal decisions for a rational agent, rather than describing how people actually make decisions.
Lead section, closing sentence
the field is important to the study of real human behavior by social scientists, as it lays the foundations to mathematically model and analyze individuals in fields such as sociology, economics, criminology, cognitive science, moral philosophy and political science.
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