IMS555 Decision Theory Topic 1
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Questions and Answers

What type of researchers typically pursue decision theory?

  • Economists, statisticians, psychologists, and philosophers (correct)
  • Computer scientists and biologists
  • Physicists and engineers
  • Historians and anthropologists

    • What is a necessary condition for making a decision?

  • Consultation with experts
  • Analysis of data
  • Existence of a problem or theoretical question (correct)
  • Availability of resources

    • What type of problem can be described by classic mathematical models?

  • Unstructured problem
  • Programmed decision
  • Non-programmed decision
  • Structured problem (correct)

    • What is the basis for decision making in an unstructured problem?

    <p>Human intuition</p> Signup and view all the answers

    What type of decision can be handled by a routine approach?

    <p>Programmed decision</p> Signup and view all the answers

    What influences the decision to purchase an imported or local car?

    <p>Pride, price, value, maintenance, and loan facility</p> Signup and view all the answers

    What type of problem has a unique response?

    <p>Non-programmed decision</p> Signup and view all the answers

    What is an example of a theoretical question?

    <p>What to wear to a lecture</p> Signup and view all the answers

    What is the primary goal of decision theory?

    <p>To make a rational choice from a set of possible actions</p> Signup and view all the answers

    What is a decision?

    <p>A choice made between alternative courses of action in a situation of uncertainty</p> Signup and view all the answers

    What is decision making?

    <p>The process of selecting a course of action from multiple alternatives based on cognitive process</p> Signup and view all the answers

    What is a theory?

    <p>A set of assumptions, propositions, or accepted facts that attempts to provide a reasonable explanation</p> Signup and view all the answers

    What is the focus of descriptive approach of decision theory?

    <p>Describing how people make decisions</p> Signup and view all the answers

    What is the primary objective of normative approach of decision theory?

    <p>To prescribe how people should make decisions</p> Signup and view all the answers

    What does decision theory deal with?

    <p>Methods for determining the optimal course of action when a number of alternatives are available</p> Signup and view all the answers

    What is decision theory?

    <p>A theory about decisions which explains principles and methodologies</p> Signup and view all the answers

    What type of problems does decision theory focus on?

    <p>Unstructured or ill-structured problems</p> Signup and view all the answers

    Which of the following is a characteristic of a normative decision theory?

    <p>It is based on formal logic and probability theory</p> Signup and view all the answers

    What is the goal of normative decision analysis?

    <p>To develop models for optimal decision making</p> Signup and view all the answers

    What is an example of an unstructured problem?

    <p>Planning new services in an unknown market</p> Signup and view all the answers

    What does rational decision making assume about the decision maker?

    <p>That they have access to perfect information</p> Signup and view all the answers

    What is the main difference between normative and descriptive decision theories?

    <p>Normative theories are prescriptive, while descriptive theories are descriptive</p> Signup and view all the answers

    What is a characteristic of a rational decision?

    <p>It is consistent with reason or based on reason</p> Signup and view all the answers

    What is the relationship between decision theory and goal-directed behavior?

    <p>Decision theory is concerned with goal-directed behavior in the presence of options</p> Signup and view all the answers

    What is a rational decision according to the content?

    <p>A decision that is optimal for achieving a goal or solving a problem</p> Signup and view all the answers

    What is the main objective of descriptive decision theory?

    <p>To develop models of decision making that provide valid descriptions of actual decision making behaviour</p> Signup and view all the answers

    What is prescriptive decision theory concerned with?

    <p>Prescribing techniques for aiding decision making considering human limitations</p> Signup and view all the answers

    What is the primary focus of normative decision theory?

    <p>How should people make decisions in an optimal manner?</p> Signup and view all the answers

    What does prescriptive decision theory take into account?

    <p>Emotional, motivational, and other non-rational effects on decision making</p> Signup and view all the answers

    What is the relationship between prescriptive decision theory and normative decision theory?

    <p>Prescriptive theory bridges the gap between normative guidelines and descriptive observations</p> Signup and view all the answers

    What is the goal of prescriptive decision analysis?

    <p>To aid decision making by prescribing techniques</p> Signup and view all the answers

    What is the focus of descriptive decision theory in terms of human behaviour?

    <p>How humans actually behave in decision making scenarios</p> Signup and view all the answers

    Which type of person is inclined to literal truth and pragmatism?

    <p>Realist</p> Signup and view all the answers

    What is the main focus of decision theory?

    <p>Human decision making with insufficient information and incomplete control</p> Signup and view all the answers

    What type of theory explains how decisions would be made?

    <p>Normative theory</p> Signup and view all the answers

    Which type of person takes advantage of any opportunity to achieve an end?

    <p>Opportunist</p> Signup and view all the answers

    What type of problems does decision theory focus on?

    <p>Unstructured/ill-structured problems</p> Signup and view all the answers

    Which type of person looks at the worst possible outcome of each action?

    <p>Pessimist</p> Signup and view all the answers

    What is the primary purpose of prescriptive theory?

    <p>To prescribe techniques in aiding decision making</p> Signup and view all the answers

    What type of person chooses an action with the largest value?

    <p>Realist</p> Signup and view all the answers

    Study Notes

    Introduction to Decision Theory

    • Decision theory is a body of knowledge and related analytical techniques designed to help a decision maker choose among a set of alternatives in light of their possible consequences.
    • It deals with human decision making in the extent of insufficient information and incomplete control over events.
    • Decision theory answers theoretical problems, focusing on unstructured/ill-structured problems.

    Decision Making Process

    • Decision making is the process of selecting a course of action from multiple alternatives.
    • It is a cognitive process that involves awareness, perception, reasoning, and judgment.

    Decision Theory

    • Decision theory is an interdisciplinary field that involves economists, statisticians, psychologists, political and social scientists, or philosophers.
    • It explains principles, methodologies, mechanisms, and supports required for reaching a justifiable decision.
    • Decision theory is about making a rational choice from a set of possible actions and deals with methods for determining the optimal course of action when a number of alternatives are available.

    Structured and Unstructured Problems

    • Structured problems can be described by existing classic mathematical models, and the procedures for obtaining the best solution are known as standard solution methods.
    • Unstructured decision problems are fuzzy, uncertain, and vague, with no standard solution method; human intuition is often the basis for decision making in such problems.
    • Decision theory focuses on unstructured or ill-structured problems, which are worth attending to, and excludes straightforward and structured problems.

    Normative Decision Theory

    • Normative decision theory is a theory about how decisions would be made, attempting to find the best solution to a decision problem.
    • It is based on formal logic and probability theory as rules to follow that supposedly make our thought rational.
    • This theory assumes an ideal decision maker who is rational with access to perfect information and not confined by natural human limitations.

    Descriptive Decision Theory

    • Descriptive decision theory is an explanation of how decisions are actually made and what people are observed to do when making decisions.
    • It attempts to explain and uncover the behavior of people (strategies and cognitive processes) in realistic decision scenarios.

    Prescriptive Decision Theory

    • Prescriptive decision theory aims at optimization but considering human limitations to process information.
    • It takes into account emotional, motivational, and other non-rational effects due to human vulnerabilities to emotional and motivational states, and are error-prone.
    • This theory prescribes techniques for aiding decision making, bridging the gap between descriptive observations of the way people do make choices and normative guidelines for how they should make choices.

    Human Characteristics in Decision Making

    • Realist: inclined to literal truth and pragmatism
    • Optimist: disposed to take a favorable view of things
    • Pessimist: expecting the worst possible outcome
    • Opportunist: takes advantage of any opportunity to achieve an end

    Conclusion

    • Decision theory is a body of knowledge and related analytical techniques designed to help a decision maker choose among a set of alternatives in light of their possible consequences.
    • It deals with human decision making in the extent of insufficient information and incomplete control over events.
    • Decision theory answers theoretical problems, focusing on unstructured/ill-structured problems.
    • Normative theory explains how decisions would be made, descriptive theory explains how decisions are actually made, and prescriptive theory prescribes techniques for aiding decision making.

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    IMS555 Decision Theory Introduction PDF

    Description

    Introduction to Decision Theory, understanding the concept, issues and approaches including normative and descriptive methods.

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