Decision-Making Theory and Research
Decision making must be considered in any explanation of individual behavior, because behaviors are based on decisions or judgments people have made. Thus, decision-making theory and research is of interest in many fields that examine behavior, including cognitive psychology (e.g., Busemeyer, Medin, and Hastie 1995), social psychology (e.g., Ajzen 1996), industrial and organizational psychology (e.g., Stevenson, Busemeyer, and Naylor 1990), economics (e.g., Lopes 1994), management (e.g., Shapira 1995), and philosophy (e.g., Manktelow and Over 1993), as well as sociology. This section will be an overview of decision-making theory and research. Several excellent sources of further information include: Baron (1994), Dawes (1997), Gilovich (1993), and Hammond (1998).
Decision-Making Theories
Most decision-making theory has been developed in the twentieth century. The recency of this development is surprising considering that gambling has existed for millennia, so humans have a long history of making judgments of probabilistic events. Indeed, insurance, which is in effect a form of gambling (as it involves betting on the likelihood of an event happening, or, more often, not happening), was sold as early as the fifteenth and sixteenth centuries. Selling insurance prior to the development of probability theory, and in many early cases without any statistics for, or even frequencies of, the events being insured led to bankruptcy for many of the first insurance sellers (for more information about the history of probability and decision making see Hacking 1975, 1990; Gigerenzer et al.
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