Decision making must be considered in any explanation of individual behavior, because behaviors are based on decisions or judgments people have made. Thus, decision-making theory and research is of interest in many fields that examine behavior, including cognitive psychology (e.g., Busemeyer, Medin, and Hastie 1995), social psychology (e.g., Ajzen 1996), industrial and organizational psychology (e.g., Stevenson, Busemeyer, and Naylor 1990), economics (e.g., Lopes 1994), management (e.g., Shapira 1995), and philosophy (e.g., Manktelow and Over 1993), as well as sociology. This section will be an overview of decision-making theory and research. Several excellent sources of further information include: Baron (1994), Dawes (1997), Gilovich (1993), and Hammond (1998).

Decision-Making Theories

Most decision-making theory has been developed in the twentieth century. The recency of this development is surprising considering that gambling has existed for millennia, so humans have a long history of making judgments of probabilistic events. Indeed, insurance...