Decision theory provides a general, mathematically rigorous account of decision making under uncertainty. The subject includes rational choice theory, which seeks to formulate and justify the normative principles that govern optimal decision making, and descriptive choice theory, which aims to explain how human beings actually make decisions. Within both these areas one may distinguish individual decision theory, which concerns the choices of a single agent with specific goals and knowledge, and game theory, which deals with interactions among individuals. This entry will focus on rational choice theory for the single agent, but some descriptive results will be mentioned in passing.

Decision Problems

It is standard to portray decision makers as facing choices among acts that cause desirable or undesirable consequences when performed in various states of the world. Acts characterize those aspects of the world that an agent can directly control. States specify contingencies beyond her...