It is widely held that Bayesian decision theory is the final word on how a rational person should make decisions. However, Leonard Savage--the inventor of Bayesian decision theory--argued that it would be ridiculous to use his theory outside the kind of small world in which it is always possible to "look before you leap." If taken seriously, this view makes Bayesian decision theory inappropriate for the large worlds of scientific discovery and macroeconomic enterprise. When is it correct to use Bayesian decision theory--and when does it need to be modified? Using a minimum of mathematics, Rational Decisions clearly explains the foundations of Bayesian decision theory and shows why Savage restricted the theory's application to small worlds. The book is a wide-ranging exploration of standard theories of choice and belief under risk and uncertainty. Ken Binmore discusses the various philosophical attitudes related to the nature of probability and offers resolutions to paradoxes believed to hinder further progress. In arguing that the Bayesian approach to knowledge is inadequate in a large world, Binmore proposes an extension to Bayesian decision theory--allowing the idea of a mixed strategy in game theory to be expanded to a larger set of what Binmore refers to as "muddled" strategies. Written by one of the world's leading game theorists, Rational Decisions is the touchstone for anyone needing a concise, accessible, and expert view on Bayesian decision making.

Managers in organisations must make rational decisions. Rational decision making is the opposite of intuitive decision making. It is a strict procedure utilising objective knowledge and logic. It involves identifying the problem to solve, gathering facts, identifying options and outcomes, analysing them, considering all the relationships and selecting the decision. Rational decision making requires support: methods and software tools. The identification of the problem to solve needs methods that would measure and evaluate the current situation. Identification and evaluation of options and analysis of the available possibilities involves analysis and optimisation methods. Incorporating intuition into rational decision making needs adequate methods that would translate ideas or observed behaviours into hard data. Communication, observation and opinions recording is hardly possible today without adequate software. Information and data that form the input, intermediate variables and the output must be stored, managed and made accessible in a user-friendly manner. Rational Decisions in Organisations: Theoretical and Practical Aspects presents selected recent developments in the support of the widely understood rational decision making in organisations, illustrated through case studies. The book shows not only the variety of perspectives involved in decision making, but also the variety of domains where rational decision support systems are needed. The case studies present decision making by medical doctors, students and managers of various universities, IT project teams, construction companies, banks and small and large manufacturing companies. Covering the richness of relationships in which the decisions should and must be taken, the book illustrates how modern organisations operate in chains and networks; they have multiple responsibilities, including social, legal, business and ethical duties. Nowadays, managers in organisations can make transparent decisions and consider a multitude of stakeholders and their diverse features, incorporating diverse criteria, using multiple types and drivers of information and decision-making patterns, and referring to numerous lessons learned. As the book makes clear, the marriage of theoretical ideas with the possibilities offered by technology can make the decisions in organisations more rational and, at the same time, more human.

Statistical illiteracy can have an enormously negative impact on decision making. This volume of collected papers brings together applied and theoretical research on risks and decision making across the fields of medicine, psychology, and economics. Collectively, the essays demonstrate why the frame in which statistics are communicated is essential for broader understanding and sound decision making, and that understanding risks and uncertainty has wide-reaching implications for daily life. Gerd Gigerenzer provides a lucid review and catalog of concrete instances of heuristics, or rules of thumb, that people and animals rely on to make decisions under uncertainty, explaining why these are very often more rational than probability models. After a critical look at behavioral theories that do not model actual psychological processes, the book concludes with a call for a heuristic revolution that will enable us to understand the ecological rationality of both statistics and heuristics, and bring a dose of sanity to the study of rationality.

In the Second Edition of Rational Choice in an Uncertain World the authors compare the basic principles of rationality with actual behaviour in making decisions. They describe theories and research findings from the field of judgment and decision making in a non-technical manner, using anecdotes as a teaching device. Intended as an introductory textbook for advanced undergraduate and graduate students, the material not only is of scholarly interest but is practical as well. The Second Edition includes: - more coverage on the role of emotions, happiness, and general well-being in decisions - a summary of the new research on the neuroscience of decision processes - more discussion of the adaptive value of (non-rational heuristics) - expansion of the graphics for decision trees, probability trees, and Venn diagrams.

RATIONAL DECISION-MAKING For a Brighter FutureFor the Love of the World This book shows youthrough examples and application exerciseshow to make rational decisions that will make you more productive. Based on the modern philosophy of Systems-Thinking, the book presents a well-defined path to living a productive life: making rational choices that will help you meet your long-term goals and fulfill your obligations to others. To assist you, the book provides tools and concepts you can use to set your objectives, identify and weigh the options, and evaluate the expected benefits. And the many thought-provoking, real-life situations will show you how to craft strategic initiativeswhether in individual, group, organizational, or public policy decisions.

Rational Descriptions, Decisions and Designs is a reference for understanding the aspects of rational decision theory in terms of the basic formalism of information theory. The text provides ways to achieve correct engineering design decisions. The book starts with an understanding for the need to apply rationality, as opposed to uncertainty, in design decision making. Inductive logic in computers is explained where the design of the machine and the accompanying software are considered. The text then explains the functional equations and the problems of arriving at a rational description through some mathematical preliminaries. Bayes' equation and rational inference as tools for adjusting probabilities when something new is encountered in earlier probability distributions are explained. The book presents as well a case study concerning the error made in following specifications of spark plugs. The author also explains the Bernoulli trials, where a probability that a better hypothesis than that already adopted may exist. The rational measure of uncertainty and the principle of maximum entropy with sample calculations are included in the text. After considering the probabilities, the decision theory is taken up where engineering design follows. Examples regarding transmitter and voltmeter designs are presented. The book ends by explaining probabilities of success and failure as applied to reliability engineering, that it is a state of knowledge rather than the state of a thing. The text can serve as a textbook for students in technology engineering and design, and as a useful reference for mathematicians, statisticians, and fabrication engineers.