What is the most common decision making math model?

Question

I have been told that there are psychological math model to make decision. I want to know what is it and how it work.

You mean models of how people should make decisions or how they actually make decisions? (This is an important distinction the precise name of which I've forgotten.) — Qiaochu Yuan, Apr 19 '13 at 05:44

memo · Answer 1 · 2013-05-29T13:36:32.033

What you are referring is probably 'prospect theory' which is developed by two psychologist Kahneman and Tversky. As one can expect from their background they developed a more descriptive theory of decision making than for example expected utility theory.. I can suggest the book "Prospect Theory: For Risk and Ambiguity" by Peter Wakker.

However, the most common model differs from this and it is certainly expected utility theory ( and its generalizations).

score 1 · Answer 2 · answered Apr 19 '13 at 05:45

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You may want to look at Markov decision process: http://en.wikipedia.org/wiki/Markov_decision_process

answered Apr 19 '13 at 05:45

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What is the most common decision making math model?

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