- the theory of making decisions based on assigning probabilities to various factors and assigning numerical consequences to the outcome.[1960-65]
* * *In statistics and related subfields of philosophy, the theory and method of formulating and solving general decision problems.Such a problem is specified by a set of possible states of the environment or possible initial conditions; a set of available experiments and a set of possible outcomes for each experiment, giving information about the state of affairs preparatory to making a decision; a set of available acts depending on the experiments made and their consequences; and a set of possible consequences of the acts, in which each possible act assigns to each possible initial state some particular consequence. The problem is dealt with by assessing probabilities of consequences conditional on different choices of experiments and acts and by assigning a utility function to the set of consequences according to some scheme of value or preference of the decision maker. An optimal solution consists of an optimal decision function, which assigns to each possible experiment an optimal act that maximizes the utility, or value, and a choice of an optimal experiment. See also cost-benefit analysis, game theory.
* * *in statistics, a set of quantitative methods for reaching optimal decisions. A solvable decision problem must be capable of being tightly formulated in terms of initial conditions and choices or courses of action, with their consequences. In general, such consequences are not known with certainty but are expressed as a set of probabilistic outcomes. Each outcome is assigned a “utility” value based on the preferences of the decision maker. An optimal decision, following the logic of the theory, is one that maximizes the expected utility. Thus, the ideal of decision theory is to make choices rational by reducing them to a kind of routine calculation.
* * *
Look at other dictionaries:
Decision theory — in economics, psychology, philosophy, mathematics, and statistics is concerned with identifying the values, uncertainties and other issues relevant in a given decision, its rationality, and the resulting optimal decision. It is closely related to … Wikipedia
decision theory — or decision analysis Gen Mgt a body of knowledge that attempts to describe, analyze, and model the process of decision making and the factors influencing it. Decision theory encompasses both formal mathematical and statistical approaches to… … The ultimate business dictionary
Decision Theory — An interdisciplinary approach to determine how decisions are made given unknown variables and an uncertain decision environment framework. Decision theory bring together psychology, statistics, philosophy and mathematics to analyze the decision… … Investment dictionary
decision theory — The systematic analysis of strategies for the optimal selection of alternative courses of action. Decision making in conditions of uncertainty is fundamental to the management of organizations, and decision theory has developed a sophisticated… … Auditor's dictionary
decision theory — noun : a branch of statistical theory that attempts to quantify the process of making choices between alternatives * * * deˈcision theory 7 [decision theory] noun uncountable (mathematics … Useful english dictionary
decision theory — /dɪ sɪʒ(ə)n ˌθɪəri/ noun the mathematical methods for weighing the various factors in making decisions ● In practice it is difficult to apply decision theory to our planning. ● Students study decision theory to help them suggest strategies in… … Marketing dictionary in english
decision theory — sprendimų teorija statusas T sritis automatika atitikmenys: angl. decision theory vok. Entscheidungstheorie, f rus. теория решений, f pranc. théorie des décisions, f … Automatikos terminų žodynas
decision theory — noun the mathematical study of strategies for optimal decision making between options involving different risks or expectations of gain or loss depending on the outcome. Compare with game theory … English new terms dictionary
decision theory — noun Date: 1961 a branch of statistical theory concerned with quantifying the process of making choices between alternatives … New Collegiate Dictionary
decision theory — The theory of choices made when each option is associated with a risk, or expectation of gain or loss, where the expectation is a function of the probability of some outcome and the total gain or loss involved. See dominance, expected utility … Philosophy dictionary