Role of Information in Decision Making of Social Agents

Vyacheslav I. Yukalov and Didier Sornette
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Vyacheslav I. Yukalov: Joint Institute for Nuclear Research; D-MTEC, ETH Zurich
Didier Sornette: ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute

No 12-10, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: The influence of additional information on the decision making of agents, who are interacting members of a society, is analyzed within the mathematical framework based on the use of quantum probabilities. The introduction of social interactions, which influence the decisions of individual agents, leads to a generalization of the quantum decision theory developed earlier by the authors for separate individuals. The generalized approach is free of the standard paradoxes of classical decision theory. This approach also explains the error attenuation effects observed for the paradoxes occurring when decision makers, who are members of a society, consult with each other, increasing in this way the available mutual information. A precise correspondence between quantum decision theory and classical utility theory is formulated via the introduction of an intermediate probabilistic version of utility theory of a novel form, which obeys the requirement that zero-utility prospects should have zero probability weights.

Keywords: Decision theory; Decision making under risk and uncertainty; Group consultations; Social interactions; Information and knowledge (search for similar items in EconPapers)
JEL-codes: C44 D03 D71 D81 D83 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2012-03, Revised 2017-04
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1210

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