Leadership

How (Not) To Do Decision Theory

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Executive Summary

The authors discuss the goals and means of positive decision theory and the implications for how to do decision theory. They argue that the goal of positive economic theory generally is to provide predictions, understanding, representation theorems and other results of decision theory should be seen as ways to achieve these goals. They also argue that the "Story" of a model is relevant to whether and how they use the model, that psychological considerations are not necessary for useful decision theory but can be helpful, and that nonchoice data, interpreted properly, can be valuable in predicting choice and so should not be ignored.

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