Making Better Decisions Decision Theory in Practice [Hardcover]

• 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

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