What Is Decision Theory?

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Richard Bradley of the LSE discusses decision theory with Nigel Warburton in this episode of the Philosophy Bites podcast. Decisions can be understood as gambles which weight beliefs and desires...This is an insight that we owe in part to F.P. Ramsey (1903-30). Does that mean we all decide in the same way?

Listen to Richard Bradley on Understanding Decisions

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DECISION-MAKING was supposed to have been cracked by science long ago. It started in 1654 with an exchange of letters between two eminent French mathematicians, Blaise Pascal and Pierre Fermat. Their insights into games of chance formed the foundation of probability theory. And in the 20th century the ideas were developed into decision theory, an elegant formulation beloved of economists and social scientists today. Decision theory sees humans as “rational optimisers”. Given a choice, we weigh up each option, considering its value and probability, and then choose the one with the “highest expected utility”.

With your experience of making decisions, you have probably noticed some flaws here. There’s the risible idea that humans are rational, and the dubious notion that we would be capable of the on-the-hoof calculations of probability, even if we could access all the necessary information. Decision theory explains how we would make choices if we were logical computers or all-knowing beings. But we’re not. We are just rather clever apes with a brain shaped by natural selection to see us through this messy world...

Continue reading Kate Douglas' article: Decision time: How subtle forces shape your choices

Further Reading

Decision theory is concerned with the reasoning underlying an agent’s choices, whether this is a mundane choice between taking the bus or getting a taxi, or a more far-reaching choice about whether to pursue a demanding political career. (Note that “agent” here stands for an entity, usually an individual person, that is capable of deliberation and action.) Standard thinking is that what an agent does on any given occasion is completely determined by her beliefs and desires/values, but this is not uncontroversial, as will be noted below. In any case, decision theory is as much a theory of beliefs, desires and other relevant attitudes as it is a theory of choice; what matters is how these various attitudes (call them “preference attitudes”) cohere together...

Continue reading the Stanford Encyclopedia of Philosophy article on Decision Theory by Steele and Stefánsson

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Efficiency - xkcd

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