Intermediate · Cognitive
Decision theory
Visual diagram · (in preparation) · Math · (in preparation) · Worked example · 3 difficulty levels.
TL;DR. The study of how agents make choices, encompassing both how they ideally should make decisions (normative) and how they actually do (descriptive).
Technical Definition
The study of how agents make choices, encompassing both how they ideally should make decisions (normative) and how they actually do (descriptive).
How it works
Decision theory, also known as the theory of choice, examines the principles underlying decision-making processes. It is divided into normative theory, which prescribes optimal choices under uncertainty, and descriptive theory, which explains how choices are actually made.
Related Concepts
- Game theory — The mathematical study of strategic interactions between rational decision-makers.