Lee Roy Beach University of Arizona
Raanan Lipshitz University of Haifa
It is customary to attribute two roles to the formal, axiomatic, rational actor theory of decision evaluation and choice: a normative role and a prescriptive role. For brevity, we will call the formal theory classical decision theory, by which we mean the collection of axiomatic models of uncertainty and risk (probability theory, including Bayesian theory) and utility (utility theory, including multiattribute utility theory), that prescribe the optimal choice of an option from an array of options, in which optimality is defined by the underlying models and the choice is dictated by an explicit rule, usually some variant of maximization of (subjective) expected utility.
In its normative role, classical decision theory is an abstract system of propositions designed to describe the choices of an ideal hypothetical decision maker--omniscient, computationally omnipotent Economic Man--given the theory's very specific assumptions about the nature of the decision task. In this role the theory actually has little relevance to real- world decisions. It is merely an internally consistent, logical system that, perhaps unfortunately, reflects its origins as an attempt to rationalize____________________