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date: 08 March 2021

Abstract and Keywords

Formal models have a long and important history in the study of human decision-making. They have served as normative standards against which to compare real choices, as well as precise descriptions of actual choice behavior. This chapter begins with an overview of the historical development of decision theory and rational choice theory and then reviews how models have been used in their normative and descriptive capacities. Models covered include prospect theory, rank- and sign-dependent utility theories and their descendants, as well as cognitive models of human decision-making like Decision Field Theory and the Leaky Competing Accumulator Model, which are based on basic psychological principles rather than assumptions of rationality.

Keywords: subjective probability, utility, rational choice models, choice axioms, cognitive model, expected utility theory, subjective expected utility theory, prospect theory, decision field theory, risk, uncertainty, independence, transitivity, stochastic dominance

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