Rational Decision Making

RATIONAL DECISION MAKING: Choosing among alternatives in a way that “properly” accords with the preferences and beliefs of an individual decision maker or those of a group making a joint decision; in particular, the subject as developed in decision theory [16] (see RATIONAL CHOICE THEORY), decision analysis [24], GAME THEORY [33], political theory [20], psychology [14] (see DECISION MAKING), and economics [10, 11] (see ECONOMICS AND COGNITIVE SCIENCE), in which it is the primary activity of homo oeconomicus, “rational economic man.” The term refers to a variety of notions, with each conception of alternatives and proper accord with preferences and beliefs yielding a “rationality” criterion. At its most abstract, the subject concerns unanalyzed alternatives (choices, decisions) and preferences reflecting the desirability of the alternatives and rationality criteria such as maximal desirability of chosen alternatives with respect to the preference ranking. More concretely, one views the alternatives as actions in the world, and determines preferences among alternative actions from preference rankings of possible states of the world and beliefs or probability judgments about what states obtain as outcomes of different actions, as in the