Making Better Decisions

Making Better Decisions : Decision Theory in Practice

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Making Better Decisions introduces readers to some of the principal aspects of decision theory, and examines how these might lead us to make better decisions. * Introduces readers to key aspects of decision theory and examines how they might help us make better decisions * Presentation of material encourages readers to imagine a situation and make a decision or a judgment * Offers a broad coverage of the subject including major insights from several sub-disciplines: microeconomic theory, decision theory, game theory, social choice, statistics, psychology, and philosophy * Explains these insights informally in a language that has minimal mathematical notation or jargon, even when describing and interpreting mathematical theorems * Critically assesses the theory presented within the text, as well as some of its critiques * Includes a web resource for teachers and students
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Product details

  • Paperback | 230 pages
  • 152 x 227 x 13mm | 354g
  • Wiley-Blackwell (an imprint of John Wiley & Sons Ltd)
  • Chichester, United Kingdom
  • English
  • 1. Auflage
  • 1444336525
  • 9781444336528
  • 672,780

Back cover copy

Making Better Decisions: Decision Theory in Practice introduces readers to some of the principal ideas from decision theory and examines how they might help us make better decisions.

The presentation is designed to appeal to students and the general reader; based on problems, readers are encouraged to imagine a situation, and then make a decision or a judgment. The problems are chosen to exemplify some principles developed in decision theory, as well as violations of these principles derived from the psychological literature.

Making Better Decisions offers explanations of both the theories we would like to adopt in order to make better decisions, and the theories that explain how those around us behave. In doing so, the book presents crucial insights into the decision-making process that can influence and change our behavior and our ability to interact with those around us.
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Table of contents

Preface viii Acknowledgments x 1 Background 1 Suggested Reading 5 2 Judgment and Choice Biases 6 Introduction 6 Problems - Group A 9 Problems - Group B 12 Framing Effects 15 Brainstorming and Formal Models 20 Endowment Effect 22 Sunk Costs 27 Decision Trees 30 Representativeness Heuristic 34 Availability Heuristic 39 Anchoring 44 Mental Accounting 46 Dynamic Inconsistency 51 Exercises 53 3 Consuming Statistical Data 57 Introduction 57 Problems 58 Conditional Probabilities 63 Gambler's Fallacy 72 Biased Samples 77 Regression to the Mean 80 Correlation and Causation 81 Statistical Significance 84 Bayesian and Classical Statistics 85 Exercises 93 4 Decisions under Risk 98 Introduction 98 Problems 99 The Independence Axiom 102 Von Neumann and Morgenstern's Result 110 Measurement of Utility 113 Risk Aversion 116 Prospect Theory 123 Exercises 130 5 Decisions under Uncertainty 133 Introduction 133 Problems 134 Subjective Probability 141 Learning From the Fact We Know 151 Causality 163 The Sure Thing Principle 166 Alternative Models 171 Objective Probabilities 172 Exercises 174 6 Well-Being and Happiness 178 Introduction 178 Problems - Group A 179 Problems - Group B 180 Measurement Issues 184 What's Happiness? 186 Exercises 188 Appendix A: Optimal Choice 191 Appendix B: Probability and Statistics 195 Solutions 204 Index 210
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About Itzhak Gilboa

Itzhak Gilboa is a chaired Professor in the Department of Economics and Decision Sciences at HEC, Paris and in the Eitan Berglas School of Economics at Tel Aviv University, and Fellow of the Cowles Foundation at Yale University. He previously held the position of chaired Professor at the Kellogg School of Management at Northwestern University. Gilboa's research focuses on decision under uncertainty. He has worked with David Schmeidler on axiomatic foundation of non-Bayesian decision theory and contributed to research in complexity in game theory, evolutionary game theory, and social choice. He is co-author of A Theory of Case-Based Decisions (with David Schmeidler, 2001), and author of Theory of Decision under Uncertainty (2009) and of Rational Choice (2010).
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Rating details

18 ratings
3.61 out of 5 stars
5 17% (3)
4 39% (7)
3 33% (6)
2 11% (2)
1 0% (0)
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