Understanding and Aiding Good Decision Making
Newsletter #15 : Decision Sciences Special Issue
This month’s newsletter invites HEC Paris’ faculty to share their research on normative, descriptive and prescriptive aspects of decision making.
Making better decisions can be seen from several perspectives. One draws a line between “good” decisions and “bad” decisions. Such a point of view is traditionally linked to Decision Theory, the discipline that provides us with the basic normative principles in choice, hence allowing for good decisions. A second perspective, based on observed behavior in the laboratory and in the field, focuses on the study of “optical illusions” of the mind (cognitive distortions) that could result in decision making biases. Decision Analysis combines both normative and descriptive aspects of Decision Theory to help take decisions in real choice situations, and hence provide prescriptions.
Professor Itzhak Gilboa from HEC Paris proposes two contributions. The first explains how analyzing decisions is a part of our humanity, and to what extent Decision Theory could help decision makers. In a second contribution, Itzhak Gilboa offers an account of how economic models can be useful despite the fact that they make unrealistic assumptions, and, in particular, analyze the behavior of rational decision makers while psychological studies show that normal people systematically depart from rationality.
Then, CNRS Research Professor Brian Hill tackles the crucial issue of how decision makers should decide in the face of radical uncertainties such as those regarding climate change or genetically modified organisms. In particular, he underlines the importance of confidence in rational decision.
In the fourth contribution, CNRS Research Professor Emmanuel Kemel shares the results of a series of laboratory experiments which study behavioral differences in decision making when consequences are measured in units of time rather than in money. The author explains why people manage time differently to managing money.
The newsletter concludes with the interview of CNRS Research Professor Mohammed Abdellaoui who shares his experience as a researcher in Decision Theory and Behavioral Decision Making over the two last decades.