Decision Theory
The study of how individuals make choices among alternatives and the principles that guide these choices. Important for designing decision-making processes and interfaces that help users make informed choices.
12 topics found for:
“rational choice”
Expected Utility Theory
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices. Essential for understanding decision-making under risk.
Homo Economicus
A theoretical concept in economics that portrays humans as rational and self-interested agents who aim to maximize their utility. Important for understanding economic decision-making and designing systems that align with rational behavior.
Take the Best Heuristic
A decision-making rule where individuals choose the option with the highest perceived value based on the first good reason that comes to mind, ignoring other information. Crucial for understanding and designing for quick decision-making processes.
Critical Thinking
The objective analysis and evaluation of an issue in order to form a judgment. Essential for making informed and rational design decisions.
Bounded Rationality
A concept that humans make decisions within the limits of their knowledge, cognitive capacity, and available time, leading to satisficing rather than optimal solutions. Crucial for designing systems and processes that account for human cognitive limitations and decision-making processes.
Irrational Escalation
The phenomenon where people continue a failing course of action due to the amount of resources already invested. Important for recognizing and mitigating biased decision-making.
Numerosity Bias
The tendency to perceive a greater quantity as a better value, regardless of the actual utility. Important for understanding consumer behavior and designing effective marketing strategies.
Hot Hand Fallacy
The mistaken belief that a person who has experienced success in a random event has a higher probability of further success in additional attempts. Crucial for understanding and designing around user decision-making biases.
Myopic Loss Aversion
A cognitive bias where individuals tend to avoid risks when they perceive potential losses more acutely than potential gains. Important for understanding decision-making behavior in users and designing systems that mitigate risk aversion.
Escalation of Commitment
A cognitive bias where individuals or organizations continue to invest in a failing project or decision due to the amount of resources already committed. Important for designers to recognize and mitigate their own risks of continuing unsuccessful initiatives.
Allais Paradox
A decision-making paradox that shows people's preferences can violate the expected utility theory, highlighting irrational behavior. Important for understanding inconsistencies in user decision-making and designing better user experiences.