The decision theory is a branch of the applied probability theory, which evaluates consequences of decisions. The decision theory is often used as economical instrument. Two well-known methods in addition are e.g. the simple efficiency analysis (NWA) or the more precise Analytic Hierarchy Process (AHP), where criteria and alternatives are represented, compared and evaluated, in order to find the optimal solution to a decision or a problem definition.

One differentiates between three subsections of the decision theory:

1. The normative decision theory looks for criteria of rational deciding and wants to give assistance for the question, how one is to decide in a given situation reasonably. In addition it must meet some simplifying model acceptance, then it must proceed for example from the axiom of the of the Entscheiders.
2. The decision theory concerns itself with the supply from procedures to the precipitation of rational and practicable decisions.
3. The descriptive decision theory examines against it empirically the question how decisions in the reality are actually made.

The basic model (normative) of the decision theory consists of the decision field and the target system. The decision field contains the activity space (quantity of the possible action alternatives), the Zustandsraum (quantity of the possible environmental conditions) and a result function, which assign a value to each combination of action and condition. A frequent problem is that the true environmental condition does not admit is. Here one speaks of uncertainty, contrary to the situation of the security, in which the environmental condition admits is. The uncertainty situation can be arranged into

• Decision under security: The occurring situation is well-known. (Deterministic decision model)
• Decision under uncertainty: It is not with security well-known, which environmental situation occurs s_j, one continues to differentiate thereby in:
  • Decision under risk: The probability p_j for the possibly occurring environmental situations s_j is well-known. (Stochastic decision model)
  • Decision under uncertainty: One knows the possibly occurring environmental situations, however not their probabilities of entrance.

With a decision under risk expectancy values can be calculated over all possible consequences of each individual decision, while with a decision under uncertainty and/or is used the principle is not possible by the insufficient reason/Indifferenzprinzip, which assigns the same probability to each option. On the basis of such probability evaluations a determination of the expectancy value can be made also under uncertainty

(In or multi-level) the decision-making process with the different consequences can be plotted as decision tree.

The decision theory is not applicable, if the entrepreneur and/or manager lets this competition likewise flow competed with a rationally acting opponent (a competitor about) to which into his decision. This can do also with the help of the probability calculation alone is not no more illustrated, since the behavior of the opponent is not deterministically however not coincidental. In such a case the game theory is used.

The decision theory is used recently also with the evaluation of investments. Under the name material option is used the decision tree procedure (and/or options) for it to be able to decide the value of flexibility concerning decisions - i.e. the option (at a later time) - to judge.

See also

Classification, cybernetics, uncertainty, decision procedure, game theory, social choice theory

Literature

• Anderson one/Sweeney/Williams: At Introduction ton management Science. Minneapolis (et al.): West Publishing CO., 71994. ISBN 0-314-02479-4. Chapter 14.
• Bamberg/Coenenberg: Economical decision teachings, 12. Aufl. 2004, publishing house Vahlen (standard text book)
• Domschke/Scholl: Bases of the operating we shank teachings., Springer publishing house, ISBN 3-540-66578-1

Articles in category "Decision theory"

We found here 38 articles.

Related Websites

We found here 3 related websites.

• Category:Decision theory - Wikipedia, the free encyclopedia
  Decision theory is the study of optimal actions, as determined by considering ... Pages in category "Decision theory". There are 57 pages in this section of ...


• DECISION THEORY
  Decision theory is a body of knowledge and related analytical techniques of ... Decision theory can apply to conditions of certainty, risk, or uncertainty. ...


• Decision theory - Wikipedia, the free encyclopedia
  Decision theory is an interdisciplinary area of study, related to and of interest to ... This area represents the heartland of decision theory. ...