2
$\begingroup$

I always thought that Decision Theory and Choice Theory are the same fields. But when reading the Wikipedia entry for Decision Theory recently, I read the explicit clarification: "not to be confused with choice theory".

Reading the article on Decision Theory, the themes covered (rational preferences, choice under uncertainty, intertemporal choice etc.), and even the approach seems to be pretty much the same as Choice Theory (assume rationality, prove the existence of vNM utilities or evoke the Savage axioms etc. and even behavioural findings such as Tversky's heuristics, quasi-hyperbolic discounting etc.).

So what exactly is the difference between Decision Theory and Choice Theory? It feels to me that the same thing is referred to as Choice Theory by Economists and other Social/ Behavioural Scientists and as Decision Theory by Statisticians, Philosophers, Computer Scientists etc. Or is it that the Decision Theory article misleadingly uses the term "Choice Theory" to only refer to "Rational Choice Theory" (as the link suggests) and so, Choice Theory (meaning Rational Choice Theory) is a sub-field of Decision Theory? If not, what is the major difference?

$\endgroup$

1 Answer 1

2
$\begingroup$

It's the latter. The Wikipedia article on decision theory uses the term "choice theory" but links it to rational choice theory.

As to the difference between rational choice theory and decision theory, the former is a sub-field of the latter dealing with "rational" decisions. For a more extensive explanation, you might want to consider the answer I got from GTP-4:

Rational Choice Theory and Decision Theory are similar in that they both involve making choices based on an evaluation of different options. However, they differ in their focus and application.

Rational Choice Theory: This theory is largely used in economics, sociology, and political science. It postulates that individuals always make prudent and logical decisions that provide them with the greatest benefit or satisfaction. These decisions are assumed to be in the individual's best self-interest and aligned with their personal objectives. For example, in economics, a consumer is assumed to choose a combination of goods that maximizes their satisfaction (utility), given their income and the prices of goods.

Decision Theory: This is a more general framework used in a variety of fields including psychology, economics, and artificial intelligence. It includes studying and providing models of how and why decisions are made, considering various factors like uncertainty and risk. It's concerned with identifying the best decision to take, assuming an ideal decision taker who is fully informed, able to compute with perfect accuracy, and fully rational. In contrast to rational choice theory, decision theory may incorporate scenarios where individuals may not act in their own best self-interest or may make choices that seem illogical.

It is worth noting that these theories are overlapping and intertwined. Rational choice theory can be considered a subfield of decision theory which focuses on decisions that maximize the utility for individuals, assuming perfect rationality. However, decision theory can also consider situations where perfect rationality may not apply, such as decisions under uncertainty, or decisions made due to biases and heuristics.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.