EconPapers    
Economics at your fingertips  
 

Decision Theory Made Relevant: Between the Software and the Shrink

Itzhak Gilboa (), Maria Rouziou and Olivier Sibony

No 1266, HEC Research Papers Series from HEC Paris

Abstract: Decision theory offers a formal approach to decision making, which is often viewed and taught as the rational way to approach managerial decisions. Half a century ago it generated high hopes of capturing and perhaps replacing intuition, and providing the “right” answer in practically all managerial situations. Today it seems fair to say that decision theory has not lived up to these expectations. Behavioral science provides ample evidence that managers fail to follow the dicta of decision theory, even when these are explained to them. As a result, executives often find decision theory frustrating and useless and prefer to rely on their intuition. This paper suggests that this extreme conclusion is unwarranted and calls for a re-appraisal of decision theory. We propose that it should not always be regarded as a mathematical tool that produces the answer; rather, it can be viewed as a framework for a dialog between the decision maker and the decision theorist. In one extreme, the decision theorist studies the problem and provides the “correct’’ answer. But in another, the decision theorist only challenges the decision maker’s intuition and logic. In between, a whole gamut of possible dialogs exists, in which decision theory doesn’t replace intuition, but supports and refines it.

Keywords: decision theory; decision maker’s intuition (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe, nep-ict and nep-upt
Date: 2018-01-01
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3178715 Full text (application/pdf)

Related works:
Journal Article: Decision theory made relevant: Between the software and the shrink (2018) Downloads
Working Paper: Decision Theory Made Relevant: Between the Software and the Shrink (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1266

DOI: 10.2139/ssrn.3178715

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().

 
Page updated 2019-04-20
Handle: RePEc:ebg:heccah:1266