Each day, and perhaps most moments of each day, we are forced to make
decisions. In the first section of this topic we shall present one account of
how one makes reasonable decisions. Our focus will be upon cases where we must
consider the probable consequences of our choosing to act one way rather than
another. We will then turn, in the second section, to situations in which we
are interacting with other persons.
Section 1: DecisionsIn the case of certainty regarding the outcome of our actions we simply chose the action with the preferable outcome. We noted that in the case of uncertainty various policies seemed possible. We discussed, for example, pessimists, those who seek to avoid the worst, and optimists, those who strive to obtain the best. In cases of decision-making under risk we recommended the policy of choosing an action choosing an action with a largest expected value, that is, a policy of mazimizing expected value. We assigned numbers to the various outcomes that represented roughly the distance between them, that represented the values of those outcomes. We then obtained the expected value by first multiplying the probability of a given state of the world times the number representing the value of the outcome. Second, we added the results in each row. This gave us the expected value of the outcome. |
Section 2: GamesIn this section we introduce some of the basic concepts of game theory. We briefly discussed both zero-sum and non-zero-sum games, noting that in the latter cooperation may yield. The minimax theorem is introduced. |
Covering Section 1 |
Covering Section 2 |