What decision analysis is about

Franz Eisenführ (), Martin Weber and Thomas Langer ()
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Thomas Langer: University of Münster

Chapter Chapter 1 in Rational Decision Making, 2010, pp 1-17 from Springer

Abstract: Summary Decision problems are often too complex to be tackled by common sense alone. Possible reasons for difficulties are uncertainty about the future or a variety of conflicting objectives. Other causes might be the existence of too many or too few alternatives, or an overwhelming number of influencing factors. A structured and rational process can help improve the chances of receiving good decision outcomes. Rationality is not a clear-cut concept. It can, however, be put into more concrete terms by defining some procedural requirements (procedural rationality) and agreeing on some basic claims regarding consistency. A complex decision problem can be simplified by decomposing it into its most basic components. Objectively correct decisions do not exist. In fact, decisions are necessarily based on subjective expectations, which are often difficult to validate, as well as subjective objectives and preferences of the decision maker. Articulating exact expectations and preferences is not an easy task for most people. Decision analytic tools and procedures have to take into account the fact that the information collected in ofter “furry”. Frequent consistency checks and specific techniques that allow the handling of incomplete information are two approaches that are used in decision analysis to cope with this problem. Prescriptive decision theory (decision analysis) is of great relevance to many areas of application. It is not only important for economic decisions but also for political, medical, legal, or technical decision making. Furthermore, decision analytic thinking can be helpful for many personal and daily life decisions.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-02851-9_1

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DOI: 10.1007/978-3-642-02851-9_1

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