Toward Good Decisions and Avoiding Bad Decisions

Kazuhisa Takemura
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Kazuhisa Takemura: Waseda University

Chapter Chapter 18 in Behavioral Decision Theory, 2021, pp 335-381 from Springer

Abstract: Abstract The final chapter of this book presents a critical examination of the psychological models of multi-attributeAttribute decision-makingMulti-attribute decision-making, findings obtained from them, and rational decision-making and considers what constitutes a “good decisionGood decision” and “bad decisionsBad decision.” First, a basic framework for ordinal utility theoryOrdinal utility theory based on[aut]Takemura, K Takemura (2011a, b). Shirizu shohisha kodo to maketeingu (1) shohisha no tazokusei ishikettei to sono bunseki [Consumer behavior and marketing (1) consumer decision-making by other attributes and its analysis]. Seni seihin shohi kagaku [Journal of the Japan Research Association for Textile End-uses], 52(11), 670–677.) is presented as normative analysis and is examined in view of rationalityRationality. By subsequently defining the version of ordinal utility theoryOrdinal utility theory expanded to multi-attributeAttribute decision-makingMulti-attribute decision-making, we will re-interpret the rationalityRationality of multi-attribute decision-makingMulti-attribute decision-making based on Arrow's general possibility theorem. Re-interpretation of the general possibility theorem of Arrow (1951) suggests[aut]Arrow, K. J. that the rational multi-attributeAttribute decision-makingMulti-attribute decision-making defined here could not be performed with the exception of one-dimensional decision-making based only on specific attributesAttribute. We descriptively analyze people’s multi-attribute decision-makingMulti-attribute decision-making to demonstrate, based on the psychological model of decision-making, the tendency of people to use one-dimensional decision-making to solve issues of multi-attribute decision-makingMulti-attribute decision-making. Finally, prescriptive examinations of multi-attribute decision-makingMulti-attribute decision-making are performed to support the argument that decision makingDecision making from a pluralistic perspective results in a “good decisionGood decision” even though one-dimensional decision-making should be avoided and even though rationalityRationality in the above sense might not be satisfied, particularly in important decision-making. This chapter also illustrates that it can be substituted by using two stage heuristics that are functionally nearly equivalent to additive multiattribute decision outcome. Finally, this chapter introduces the idea of nudgingNudging, which has received a lot of attention in recent years among prescriptive decision makingDecision making, as well as boostingBoosting, and discuss how we should think about good decisionGood decision making.

Keywords: Good decision; Bad decisions; Multi-attribute decision-making; Weak order; Conjoint system; Mental ruler; Impossibility theorem; Nudges; Boosts (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-5453-4_18

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DOI: 10.1007/978-981-16-5453-4_18

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