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decision theory

statistics
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https://64.176.36.150/science/decision-theory-statistics
Also known as: decision analysis, statistical decision theory
Article History
Category: Science & Tech
Key People:
Daniel Ellsberg
Herbert A. Simon
Related Topics:
statistics
von Neumann–Morgenstern utility function
expected utility
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decision theory, in statistics, a set of quantitative methods for reaching optimal decisions. A solvable decision problem must be capable of being tightly formulated in terms of initial conditions and choices or courses of action, with their consequences. In general, such consequences are not known with certainty but are expressed as a set of probabilistic outcomes. Each outcome is assigned a “utility” value based on the preferences of the decision maker. An optimal decision, following the logic of the theory, is one that maximizes the expected utility. Thus, the ideal of decision theory is to make choices rational by reducing ...(100 of 107 words)

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