scholarly journals Teaching & Learning Guide for: Risky-choice framing and rational decision-making

2021 ◽  
Author(s):  
Sarah A. Fisher ◽  
David R. Mandel
Keyword(s):  
Decision Making ◽  
Psychological Research ◽  
Risky Choice ◽  
Decision Makers ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Alternative Approaches ◽  
Learning Guide ◽  
Choice Framing

An influential program of psychological research suggests that people’s judgements and decisions depend on the way in which information is presented, or ‘framed’. In a central choice paradigm, decision-makers seem to adopt different preferences, and different attitudes to risk, depending on whether the options specify the number of people who will be saved or the corresponding number who will die. It is standardly assumed that such responses violate a foundational tenet of rational decision-making, known as the principle of description invariance. However, recent theoretical and empirical research has begun to challenge the dominant ‘irrationalist’ narrative. The alternative approaches being developed typically pay close attention to how decision- makers represent decision problems (including their interpretation of numerical quantifiers or predicate choice). They also highlight the need for a more robust characterization of the description invariance principle itself.

scholarly journals Risky-choice framing and rational decision-making

2021 ◽  
Author(s):  
Sarah A. Fisher ◽  
David R. Mandel
Keyword(s):  
Decision Making ◽  
Framing Effects ◽  
Psychological Research ◽  
Risky Choice ◽  
Decision Makers ◽  
Future Research ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Choice Framing

This article surveys the latest research on risky-choice framing effects, focusing on the implications for rational decision-making. An influential program of psychological research suggests that people’s judgements and decisions depend on the way in which information is presented, or ‘framed’. In a central choice paradigm, decision-makers seem to adopt different preferences, and different attitudes to risk, depending on whether the options specify the number of people who will be saved or the corresponding number who will die. It is standardly assumed that such responses violate a foundational tenet of rational decision-making, known as the principle of description invariance. We discuss recent theoretical and empirical research that challenges the dominant ‘irrationalist’ narrative. These approaches typically pay close attention to how decision-makers represent decision problems (including their interpretation of numerical quantifiers or predicate choice) and they highlight the need for a more robust characterization of the description invariance principle. We conclude by indicating avenues for future research that could bring us closer to a complete – and potentially rationalizing – explanation of framing effects.

Decision of the Wind Power Projects Based on Cost-Efficient Method

2012 ◽  
Vol 246-247 ◽  
pp. 551-555
Author(s):  
Hong Gao ◽  
Wu Gao ◽  
Guo Lu
Keyword(s):  
Decision Making ◽  
Cost Effectiveness ◽  
Wind Power ◽  
Decision Makers ◽  
Life Cycle Costs ◽  
Rational Decision ◽  
Final Project ◽  
Rational Decision Making ◽  
Cost Efficient ◽  
Rational Conclusion

To start from the investment characteristics of wind power projects, account for wind power projects in the life-cycle costs and project income, decision analysis and application of cost-effectiveness of wind power projects, the final project decision makers come to the scientific and rational decision-making program. To carry out the analysis of the case by cost-effectiveness, then come to a scientific and rational conclusion.

scholarly journals Thermodynamics as a theory of decision-making with information-processing costs

2013 ◽  
Vol 469 (2153) ◽  
pp. 20120683 ◽  
Author(s):  
Pedro A. Ortega ◽  
Daniel A. Braun
Keyword(s):  
Decision Making ◽  
Free Energy ◽  
Information Processing ◽  
Expected Utility ◽  
Statistical Physics ◽  
Variational Principles ◽  
Decision Makers ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Human Decision

Perfectly rational decision-makers maximize expected utility, but crucially ignore the resource costs incurred when determining optimal actions. Here, we propose a thermodynamically inspired formalization of bounded rational decision-making where information processing is modelled as state changes in thermodynamic systems that can be quantified by differences in free energy. By optimizing a free energy, bounded rational decision-makers trade off expected utility gains and information-processing costs measured by the relative entropy. As a result, the bounded rational decision-making problem can be rephrased in terms of well-known variational principles from statistical physics. In the limit when computational costs are ignored, the maximum expected utility principle is recovered. We discuss links to existing decision-making frameworks and applications to human decision-making experiments that are at odds with expected utility theory. Since most of the mathematical machinery can be borrowed from statistical physics, the main contribution is to re-interpret the formalism of thermodynamic free-energy differences in terms of bounded rational decision-making and to discuss its relationship to human decision-making experiments.

Consequence and Utility Modeling in Rational Decision Making

2004 ◽  
Author(s):  
Marc A. Maes ◽  
Michael H. Faber ◽  
Sherif S. Abdelatif
Keyword(s):  
Decision Making ◽  
Utility Functions ◽  
Decision Makers ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Large Structures ◽  
Utility Optimization ◽  
Definition Of ◽  
Cascade Effects

Offshore design and risk assessment are typically marked by far-reaching choices and important one-time decisions. Decision analysis involving large structures, sensitive environments, and difficult operations, requires a very careful formulation of utility and consequences. It is shown in this paper that one of the most important shortcomings of such analyses stems from an incomplete definition of the system, and from the failure to include various “follow-up” consequences. “Follow-up” consequences are, generally speaking, triggered by extreme losses, such as excessive business losses, consequences from unexpected cascade effects, collateral and indirect losses, or other intangible losses. The non-inclusion of such losses occurs either voluntarily or involuntarily. Often the identification and the valuation of follow-up consequences can be prohibitively difficult. For such cases, it is possible to use a simple model based on risk aversion to the consequences associated with extreme discrete hazards during the lifetime of a system. This model is developed in the framework of a lifecycle utility optimization. To add practical value to this model, we also introduce the concept of a Bayesian updating of utility functions. Since utility functions are all about expressing the preferences of expert decision makers, we refer to the Bayesian parameters as “preference” parameters. The paper shows that the approaches developed lead to better and more risk-consistent decision making. An illustrative example is given in the paper, highlighting the significance of the findings.

Resource-rational decision making

2021 ◽  
Vol 41 ◽  
pp. 15-21
Author(s):  
Rahul Bhui ◽  
Lucy Lai ◽  
Samuel J Gershman
Keyword(s):  
Decision Making ◽  
Rational Decision ◽  
Rational Decision Making

Author reply: Empathy Does Provide Rational Support for Decisions. But Is It the Right Decision?

2012 ◽  
Vol 4 (1) ◽  
pp. 96-97 ◽  
Author(s):  
Fritz Breithaupt
Keyword(s):  
Decision Making ◽  
Rational Decision ◽  
Author Reply ◽  
Rational Decision Making ◽  
Rational Support ◽  
The One ◽  
The Right

This article examines the relation of empathy and rational judgment. When people observe a conflict most are quick to side with one of the parties. Once a side has been taken, empathy with that party further solidifies this choice. Hence, it will be suggested that empathy is not neutral to judgment and rational decision-making. This does not mean, however, that the one who empathizes will necessarily have made the best choice.

Evidential Decision Theory

2021 ◽  
Author(s):  
Arif Ahmed
Keyword(s):  
Decision Making ◽  
Decision Theory ◽  
Rational Decision ◽  
Evidential Decision Theory ◽  
Radical Theory ◽  
Rational Decision Making ◽  
Evidential Decision ◽  
Theoretic Foundations

Evidential Decision Theory is a radical theory of rational decision-making. It recommends that instead of thinking about what your decisions *cause*, you should think about what they *reveal*. This Element explains in simple terms why thinking in this way makes a big difference, and argues that doing so makes for *better* decisions. An appendix gives an intuitive explanation of the measure-theoretic foundations of Evidential Decision Theory.

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