Concepts: Decision Theory
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Decision theory is a branch of economics, statistics, and philosophy that employs expected utility and probability to model rational behavior under uncertainty.
It focuses on optimal decisions for rational agents, unlike cognitive and behavioral sciences which describe actual decision-making. This field is crucial for social sciences, providing foundations for rational agent models used in sociology, economics, criminology, cognitive science, and political science.
Normative decision theory identifies optimal decisions based on an ideal, fully rational decision maker. Its practical application, decision analysis, develops tools and methodologies to improve decision-making.
Conversely, descriptive decision theory examines observed behaviors, assuming consistent decision-making rules. These rules may have procedural or axiomatic frameworks, reconciling traditional axioms with behavioral deviations, or provide functional forms for time-inconsistent utility functions.