Decision Theory

Discipline: Economics

Decision theory is a fundamental aspect of economics in which individuals make rational choices from a range of alternatives that may be characterized by varying price.

In determining a course of action, an individual must evaluate conditions of uncertainty and risk.

Source:
A K Sen, 'Choice Functions and Revealed Preferences', Review of Economic Studies, 38, 2 (1971), 307-17

Also see:

· bernoulli's hypothesis
· bounded rationality
· capital asset pricing model
· decision tree
· uncertainty

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