How (not) to do decision theory

Eddie Dekel, Barton L. Lipman

Research output: Contribution to journalArticlepeer-review

Abstract

We discuss the goals and means of positive decision theory and the implications for how to do decision theory. We argue that the goal of positive economic theory generally is to provide predictions and understanding and that representation theorems and other results of decision theory should be seen as ways to achieve these goals. We also argue that the interpretation of a model is relevant to whether and how we use the model, that psychological considerations are not necessary for useful decision theory but can be helpful, and that nonchoice data, interpreted properly, can be valuable in predicting choice and therefore should not be ignored.

Original languageEnglish
Pages (from-to)257-282
Number of pages26
JournalAnnual Review of Economics
Volume2
DOIs
StatePublished - 2010

Keywords

  • Axioms
  • Choice theory
  • Representations

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