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2014 | Buch

Behavioral Decision Theory

Psychological and Mathematical Descriptions of Human Choice Behavior

verfasst von: Kazuhisa Takemura

Verlag: Springer Japan

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Über dieses Buch

This book provides an overview of behavioral decision theory and related research findings. In brief, behavioral decision theory is a general term for descriptive theories to explain the psychological knowledge related to decision-making behavior. It is called a theory, but actually it is a combination of various psychological theories, for which no axiomatic systems, such as the utility theory widely used in economics, have been established; it is often limited to qualitative knowledge. However, as suggested in the studies of H. A. Simon, who won the Nobel Prize for Economics in 1978, and D. Kahneman, who won the prize in 2002, the psychological methodology and knowledge of behavioral decision theory have been applied widely in such fields as economics, business administration, and engineering, and are expected to become more useful in the future. This book explains various behavioral decision theories related to decision-making processes. Numerous models have been proposed to explain the psychological processes related to such a selection of decision strategies, and this book also introduces some new models that are useful to explain decision-making processes. The book concludes with speculation about the future of modern behavioral decision theories while referring to their relation to fields associated with neuroscience, such as neuroeconomics, that have been developed in recent years. In addition, each chapter includes a bibliography that can be referred to when studying more details related to behavioral decision theory. Reading this book requires no advanced expertise; nonetheless, an introductory knowledge of psychology, business administration, and economics, and approximately a high school graduate’s level of mathematics should facilitate the reader’s comprehension of the content.

Inhaltsverzeichnis

Frontmatter

Behavioral Decision Theory and the Idea of It

Frontmatter
Chapter 1. Decision-Making Phenomenon and Behavioral Decision Theory
Abstract
This chapter first presents the conceptual framework of the decision-making phenomenon, which is apparently almost universal among decision-making studies and which explains how decision-making under certainty, risk, and uncertainty can be understood. Consequently, the way in which behavioral decision theory is positioned in the study of decision-making and how it is related to other theories of decision-making are explained.
Kazuhisa Takemura

Preference Reversal Phenomenon and Description of the Phenomenon

Frontmatter
Chapter 2. Ordinal Utility and Preference Reversal Phenomenon
Abstract
Chapter 1 described that decision-making phenomena are broadly divisible into those under certainty, those under risk, and others under uncertainty. This chapter first introduces the concept of utility used to explain such decision-making phenomena and briefly presents the idea of traditional ordinal utility theory.
Kazuhisa Takemura
Chapter 3. Causes of Preference Reversal Phenomenon
Abstract
Chapter 2 provided descriptions of preference reversal phenomenon. This phenomenon was reported first by psychologists such as Lindman (1971) and Lichtenstein and Slovic (Slovic and Lichtenstein 1968; Lichtenstein and Slovic 1971) as the phenomenon of preference relation inconsistency that results from the methods of selection and pricing in gambles. The selection problem of these studies had the test subjects choose between Gamble H with a high winning percentage and a small amount of prize money (i.e., the winning percentage is 28/36 and the prize is $10) and Gamble L with a low winning percentage and a large amount of prize money (i.e., the winning percentage 3/36 and the prize is $100). The pricing question asked how much the lowest probable price at which Gamble H and Gamble L could be sold if the respondents owned them. In most cases, Gamble H was preferred in the selection problem and Gamble L was priced higher than the others in the pricing question (Slovic and Lichtenstein 1983; Slovic 1995; Tversky and Thaler 1990).
Kazuhisa Takemura
Chapter 4. Psychology of Preference Reversals and Prominence Hypothesis
Abstract
Chapter 3 introduced the experimental research of Tversky et al. (1990), arguing that the preference reversal phenomenon can be interpreted as a deviation from procedural invariance. A deviation from procedural invariance refers to a trait by which preference is reversed by preference revelation procedures. Tversky et al. asserted that the preference reversal phenomenon was explainable by partial modification of expected utility theory such as transitivity and independence axiom. This chapter will describe the prominence hypothesis as a psychological interpretation of this phenomenon and the contingent-weighting model (Tversky et al. 1988; Slovic et al. 1990) of the specific representation of the hypothesis and introduce some experiments related to the model.
Kazuhisa Takemura

Expected Utility Theory and Its Counterexamples

Frontmatter
Chapter 5. Expected Utility Theory and Psychology
Abstract
Expected utility theory is a major theory of decision making under risk. Decision making under risk is a type of decision-making in which the probability distribution of the results is known. This expected utility theory is assumed in numerous theories of economics. Certainly, any student taking economics should have been taught it in a course of some kind.
Kazuhisa Takemura
Chapter 6. Axioms and Counterexamples Expected Utility Theory
Abstract
Chapter 5 explained the relevance between the initial idea of expected utility theory and psychology and introduced some studies of utility measurement based on expected utility theory. This chapter will first explain the axiomatic system of expected utility theory, then how to approach the axiomatic system, with introduction of some counterexamples.
Kazuhisa Takemura

Decision Making and Prospect Theory

Frontmatter
Chapter 7. Preference Paradox and Nonlinear Expected Utility Theory
Abstract
The previous chapter explained that expected utility theory included counterexamples called the Allais paradox (Allais 1953) and the Ellsberg paradox (Ellsberg 1961). The Allais and Ellsberg paradoxes are interpreted as deviations from the independence axiom. This chapter first explains the relations between these paradoxes and the independence axiom.
Kazuhisa Takemura
Chapter 8. Prospect Theory and Decision-Making Phenomena
Abstract
Prospect theory, proposed by Kahneman and Tversky (1979) (Tversky and Kahneman 1992), is a theory that combines the knowledge of behavioral decision theory and nonlinear utility theory (or generalized expected utility theory). This chapter first reports the forecasts derived from the basic assumptions of prospect theory and empirical examples of such forecasts. It subsequently provides an overview of a new version of cumulative prospect theory that explains decision-making not only under risk but also under uncertainty and in light of experimental research into this theory.
Kazuhisa Takemura

The Framing Effect and Its Descriptions

Frontmatter
Chapter 9. The Framing Effect of Decision Making
Abstract
The body of utility theory that explains the phenomenon of decision making has developed new theories such as nonlinear utility theory to explain decision making under uncertainty. There is, however, a phenomenon called the framing effect which cannot be explained in its essence by the body of utility theory. The framing effect refers to phenomena in which preference is reversed even for the same decision making problem because of changes in perspectives resulting from differences in the linguistic expressions used to describe the decision making problem, resulting in varied results of decision making.
Kazuhisa Takemura
Chapter 10. Theories Used to Explain the Framing Effect
Abstract
Chapter 9 introduced empirical studies of the framing effect. This chapter will explain the reasons why the framing effect occurs. Tversky and Kahneman (1981) explained the framing effect based on prospect theory (Kahneman and Tversky 1979, 1992), which they proposed. This chapter will first use this prospect theory to explain the framing effect, and subsequently use the contingent focus model (Takemura 1994; Takemura and Fujii 1999, 2001a)––an alternative explanation to prospect theory––for the explanation and introduce the empirical research related to this model.
Kazuhisa Takemura

Decision-Making Process and Its Theory

Frontmatter
Chapter 11. Decision-Making Process
Abstract
This chapter presents a description of a decision-making process. The previous chapters have explained the decision-making phenomenon and theories to describe the phenomenon, which, however, have largely omitted a description of the process through which a decision is made. Accordingly, this chapter presents a description of how the psychological process used in decision making is explainable using a technique to follow the decision-making process. This chapter also elucidates the task variables and emotional factors affecting the decision-making process. The final section explains the changes made to cognition in psychological processes after decision making.
Kazuhisa Takemura
Chapter 12. Behavioral Decision Theories that Explain Decision-Making Processes
Abstract
This article will explain various behavioral decision theories related to decision-making processes. As explained last time, decision strategies for decision-making take numerous forms. The selection of decision strategies is affected by such condition factors as the number of alternatives and the number of attributes. Numerous models have been proposed to explain the psychological processes related to such a selection of decision strategies. This chapter will introduce some models that are useful to explain decision-making processes. It ends with some speculation about the future of modern behavioral decision theories while referring to their relation with fields related to neuroscience, such as neuroeconomics, that have been developed in recent years.
Kazuhisa Takemura

Behavioral Decision Theory and Good Decision Making

Frontmatter
Chapter 13. Behavioral Decision Theory and Good Decision Making
Abstract
The final chapter of this book presents a critical examination of the psychological models of multi-attribute decision-making, findings obtained from them, and rational decision-making and considers what constitutes a “good decision.” First, a basic framework for ordinal utility theory based on Takemura (2011a, b) is presented as normative analysis and is examined in view of rationality. By subsequently defining the version of ordinal utility theory expanded to multi-attribute decision-making, we will re-interpret the rationality of multi-attribute decision-making based on Arrow's general possibility theorem. Re-interpretation of the general possibility theorem of Arrow (1951) suggests that the rational multi-attribute decision-making defined here could not be performed with the exception of one-dimensional decision-making based only on specific attributes. We descriptively analyze people’s multi-attribute decision-making to demonstrate, based on the psychological model of decision-making, the tendency of people to use one-dimensional decision-making to solve issues of multi-attribute decision-making. Finally, prescriptive examinations of multi-attribute decision-making are performed to support the argument that decision making from a pluralistic perspective results in a “good decision” even though one-dimensional decision-making should be avoided and even though rationality in the above sense might not be satisfied, particularly in important decision-making.
Kazuhisa Takemura
Backmatter
Metadaten
Titel
Behavioral Decision Theory
verfasst von
Kazuhisa Takemura
Copyright-Jahr
2014
Verlag
Springer Japan
Electronic ISBN
978-4-431-54580-4
Print ISBN
978-4-431-54579-8
DOI
https://doi.org/10.1007/978-4-431-54580-4