S1525 Psychology of Decision Making in Uncertain World: Introduction to Behavioral Decision Theory and Its Application - short course
Takemura Kazuhisa
This course examines basic concepts of behavioral decision theory in uncertain world. Behavioral decision theory is described briefly as the general term for descriptive theories to explain the psychological knowledge related to people’s decision-making behavior. It is called theory, but it is a combination of various psychological theories, for which no axiomatic systems such as those with which the utility theory widely used in economics have been established, but it is often limited to qualitative knowledge. As the studies of H. A. Simon, who won the Nobel Prize for economics in 1978, and D. Kahneman, who won the prize in 2002 suggest, however, the psychological methodology and knowledge of behavioral decision theory have been applied widely in such fields as economics, business administration, and engineering, and are expected to become useful in the future. This course will explain various behavioral decision theories related to decision-making processes. Numerous models have been proposed to explain the psychological processes related to such a selection of decision strategies. This course will also introduce some new models that are useful to explain decision-making processes. It ends with some speculation about the future of modern behavioral decision theories while referring to their relation with fields related to neuroscience, such as neuroeconomics, that have been developed in recent years.
Although decision-making broadly refers to the function of consciousness to make a decision, it can also be defined technically as the act of selecting an option from a group of alternatives, i.e. the choice of action. For instance, selecting the preferred means of transportation, deciding which product to purchase, and determining which proposal to adopt are examples of decision-making. We, as consumers, make decisions about purchasing various goods, and at times, must make decisions related to corporate activities and political issues. Examining optimal decision-making reveals that rationality is necessary in the course of making the decision. A decision for which the purpose and method are contradictory is somehow not right. When we intend to make a good decision, it appears that we often assume that we will select the optimal alternative, i.e. the best decision-making. This is what is called the "best decision-making” in the world of business. This course also examines the possibility of best decision, better decision, and good decision thinking through findings of decision research.
Goal of the course
The student will learn descriptive theories of decision-making in uncertain and complex world, and will learn recent psychological findings and behavioral theories of human decision making process in social situations. Student will also learn typical normative decision theories such as expected utility theory and practical applications of decision research to marketing and policy making.
Pre-requisite: None.
Course length: 20 h (3 ECTS), Monday and Wednesday 1.30-3 pm
Start date: 13 April. Exam week: 25-29 May.
Evaluation
Readings