Sage, Andrew P. School of Information Technology and Engineering, George Mason University, Fairfax, Virginia.
Last reviewed:January 2020
- Concepts and terminology
- Categories of problems
- Sample problem
- Value or utility theory
- Bases of normative decision theory
- Decision matrices
- Determination of utility
- Generation of a utility curve
- Utility assessment
- Related Primary Literature
- Additional Reading
A broad range of concepts which have been developed to both describe and prescribe the process of decision making, where a choice is made from a finite set of possible alternatives. Normative decision theory describes how decisions should be made in order to accommodate a set of axioms believed to be desirable; descriptive decision theory deals with how people actually make decisions; and prescriptive decision theory formulates how decisions should be made in realistic settings. Thus, this field of study involves people from various disciplines: behavioral and social scientists and psychologists who generally attempt to discover elaborate descriptive models of the decision process of real humans in real settings; mathematicians and economists who are concerned with the axiomatic or normative theory of decisions; and engineers and managers who may be concerned with sophisticated prescriptive decision-making procedures.
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