Making Better Decisions (eBook)

Decision Theory in Practice

Itzhak Gilboa (Autor)

eBook Download: PDF

2010
John Wiley & Sons (Verlag)
978-1-4443-2814-1 (ISBN)

Infos

Making Better Decisions introduces readers to some of the principal aspects of decision theory, and examines how these might lead us to make better decisions.

• Introduces readers to key aspects of decision theory and examines how they might help us make better decisions
• Presentation of material encourages readers to imagine a situation and make a decision or a judgment
• Offers a broad coverage of the subject including major insights from several sub-disciplines: microeconomic theory, decision theory, game theory, social choice, statistics, psychology, and philosophy
• Explains these insights informally in a language that has minimal mathematical notation or jargon, even when describing and interpreting mathematical theorems
• Critically assesses the theory presented within the text, as well as some of its critiques
• Includes a web resource for teachers and students

Itzhak Gilboa is a chaired Professor in the Department of Economics and Decision Sciences at HEC, Paris and in the Eitan Berglas School of Economics at Tel Aviv University, and Fellow of the Cowles Foundation at Yale University. He previously held the position of chaired Professor at the Kellogg School of Management at Northwestern University. Gilboa's research focuses on decision under uncertainty. He has worked with David Schmeidler on axiomatic foundation of non-Bayesian decision theory and contributed to research in complexity in game theory, evolutionary game theory, and social choice. He is co-author of A Theory of Case-Based Decisions (with David Schmeidler, 2001), and author of Theory of Decision under Uncertainty (2009) and of Rational Choice (2010).

Inhalt

Preface viii

Acknowledgments x

1 Background 1

Suggested Reading 5

2 Judgment and Choice Biases 6

Introduction 6

Problems - Group A 9

Problems - Group B 12

Framing Effects 15

Brainstorming and Formal Models 20

Endowment Effect 22

Sunk Costs 27

Decision Trees 30

Representativeness Heuristic 34

Availability Heuristic 39

Anchoring 44

Mental Accounting 46

Dynamic Inconsistency 51

Exercises 53

3 Consuming Statistical Data 57

Introduction 57

Problems 58

Conditional Probabilities 63

Gambler's Fallacy 72

Biased Samples 77

Regression to the Mean 80

Correlation and Causation 81

Statistical Significance 84

Bayesian and Classical Statistics 85

Exercises 93

4 Decisions under Risk 98

Introduction 98

Problems 99

The Independence Axiom 102

Von Neumann and Morgenstern's Result 110

Measurement of Utility 113

Risk Aversion 116

Prospect Theory 123

Exercises 130

5 Decisions under Uncertainty 133

Introduction 133

Problems 134

Subjective Probability 141

Learning From the Fact We Know 151

Causality 163

The Sure Thing Principle 166

Alternative Models 171

Objective Probabilities 172

Exercises 174

6 Well-Being and Happiness 178

Introduction 178

Problems - Group A 179

Problems - Group B 180

Measurement Issues 184

What's Happiness? 186

Exercises 188

Appendix A: Optimal Choice 191

Appendix B: Probability and Statistics 195

Solutions 204

Index 210

Rezensionen

"The book is a modern take on decision making. The innovative
scope will inspire instructors by encouraging them to include a
combination rather than a subset of decision-theoretic,
statistical, behavioral, and philosophical concepts in their
courses."

--Marzena J. Rostek, University of Wisconsin

"Written by a leading authority and teacher in the area of
decision theory, this is a terrific combined
textbook-handbook for students and practitioners of
management. Indeed, it is a terrific book for everyone interested
in 'making better decisions.'"

--Adam Brandenburger, New York University

"This book is extremely effective for anyone who wants to
acquire quick, basic understanding of old and new concepts of
decision theory, with a minimum level of technical
details."

--Ehud Kalai, Northwestern University

"Gilboa is one of the leaders of the revolution that has swept
through the field of decision theory in the past few decades, in
which mathematical methods of statistics and economics have been
integrated with findings from modern psychology. In this book he
provides an accessible and practical survey of the state of the
art, which encourages readers to reflect on - and try to
sharpen - their intuitions and habits of decision
making. It would make an excellent primary or supplementary
text for an undergraduate- or masters-level course in decision
theory. It should also be useful and enjoyable reading for anyone
who wants to learn about concepts that can be used and mistakes
that should be avoided when taking calculated risks."

--Robert Nau, Duke University

"Itzhak Gilboa is one of the deepest thinkers in modern decision
theory. In this fascinating and wonderfully written book he uses
the fundamental models of decision making as a basis for reflection
upon several systematic patterns revealed by our everyday choices.
He strikes a nice balance between analytical models, psychological
insights, and pragmatism with the end goals of improving our
decision making and better understanding the decisions of
others."

--Tomasz Strzalecki, Harvard University

Produkt-Details

• Erscheint lt. Verlag: 23.7.2010
• Sprache: englisch
• Themenwelt: Wirtschaft ► Allgemeines / Lexika
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Mikroökonomie
• Schlagworte: Decision analysis, decision theory, game theory, statistics • Economics • Economic Theory • Microeconomics • Mikroökonomie • Mikroökonomie • Volkswirtschaftslehre • Wirtschaftstheorie
• ISBN-10: 1-4443-2814-X / 144432814X
• ISBN-13: 978-1-4443-2814-1 / 9781444328141