Towards a theory of decision-making without paradoxes.

Abstract

Human subjects often violate the rational decision–making theory, which is based on the notion of expected utility and axioms of choice (Neumann & Morgenstern, 1944; Savage, 1954). The counterexamples, suggested by Allais (1953) and Ellsberg (1961), deserve special attention because they point at our lack of understanding of how humans make decisions. The paradoxes of decision–making are particularly important for the ACT–R theory which currently relies on expected utility. This paper presents two alternative methods: A random prediction method that uses subsymbolic computations and a method that uses symbolic reasoning for qualitative decision– making. Both methods are tested on ACT–R models of the paradoxes, and the advantages of each method are discussed.

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