This book presents the content of a year's course in decision processes
for third and fourth year students given at the University of Toronto. A
principal theme of the book is the relationship between normative and
descriptive decision theory. The distinction between the two approaches
is not clear to everyone, yet it is of great importance. Normative
decision theory addresses itself to the question of how people ought to
make decisions in various types of situations, if they wish to be
regarded (or to regard themselves) as 'rational'. Descriptive decision
theory purports to describe how people actually make decisions in a
variety of situations. Normative decision theory is much more formalized
than descriptive theory. Especially in its advanced branches, normative
theory makes use of mathematicallanguage, mode of discourse, and
concepts. For this reason, the definitions of terms encountered in
normative decision theory are precise, and its deductions are rigorous.
Like the terms and assertions of other branches of mathematics, those of
mathematically formalized decision theory need not refer to anything in
the 'real', i. e. the observable, world. The terms and assertions can be
interpreted in the context of models of real li fe situations, but the
verisimilitude of the models is not important. They are meant to capture
only the essentials of adecision situation, which in reallife may be
obscured by complex details and ambiguities. It is these details and
ambiguities, however, that may be crucial in determining the outcomes of
the decisions.
