Theory of Decision I

part A: decisions under certainty (example questions: What are preferences and utility? How to measure the intensity of preferences? How to consider many criteria at once? How to choose the right option from a menu?)

part B: decisions under risk (What is risk? How to measure risk and attitudes towards risk? Does the rational man play the roulette, insure from the flood, place bets on the score of a sport event?)

Decision theory deals with the foundations of classical and contemporary economics. This lecture addresses two key questions: a) how SHOULD decisions be made and b) how decisions ARE made. These two questions determine the focus of the two most important lines of thought in economics, namely the classical approach and the increasingly more popular behavioral approach.

The goal of this course is to acquaint students with the axiomatic approach in economic theory in the areas of decisions made under certainty, involving multiple criteria or made under conditions of risk. We introduce the most important preference representation theorems, that are the cornerstone of modern economics. We discuss the fascinating debate between the economists representing the normative (rational) approach on one side and the behavioral economists representing the descriptive approach. This lecture presents economics as a truly interdisciplinary field, that takes advantage of advanced mathematics and at the same time allows and encourages inspiration taken from psychology and sociology, the field that produces mathematical representation theorems, but also engages in applications and experiments. Student of this course should get to know both sides of the field: the soft one that is exposed in a best-seller books such as Thinking fast and slow by Daniel Kahnemann, Misbehaving by Richard Thaler or The undoing project by Michael Lewis, as well as the formal (rigorous) one that can be found in the best economic journals such as Econometrica or Journal of Political Economy.

Two lectures: Theory of decision I and Theory of decision II provide an overview of the whole decision theory. The division is made according to the thematic issues: TD I: certainty, objective uncertainty, TD II: time, subjective uncertainty, group decisions. Although highly recommended, it is not necessary for the student to take these two lectures in a sequence.

Literatura podstawowa:

1. Lewandowski M., Script in decision theory, http://www.mlewandowski.waw.pl/wp-content/uploads/2016/02/tpd.pdf

2. Gilboa I., Lecture Notes on the Theory of Decision under Uncertainty, http://www.econ.hit-u.ac.jp/~kmkj/uncertainty/Gilboa_Lecture_Notes.pdf

3. Kreps David, Notes on the Theory of Choice, Westview Press, 1988.

4. Noor J., Lecture Notes on Economic Theory and Psychology

5. L.C. van der Gaag, S. Renooij, P. de Waal, Lecture notes in decision theory http://www.cs.uu.nl/docs/vakken/bk/#schema

Literatura uzupełniająca:

1. Fishburn P., Utility theory for decision making

2. Raiffa H., Keeney R. L., Decision Analysis with Multiple Conflicting Objectives, Preferences and Value Tradeoffs, 1976

3. Gilboa I., Lecture Notes for Introduction to DecisionTheory, https://itzhakgilboa.weebly.com/uploads/8/3/6/3/8363317/gilboa_notes_for_introduction_to_decision_theory.pdf

4. Blume L., Halpern J., Decision theory lecture notes, http://www.cs.cornell.edu/courses/cs5846/2014sp/5846-14notes.html

5. Dean M., Topics in Microeconomics - Decision Theory and Evidence, http://www.columbia.edu/~md3405/DT_15.shtml

6. Schmeidler D., Lecture notes on decision theory, http://www.tau.ac.il/~schmeid/PDF/Decision_Theory_Technical_Notes.pdf

Kryteria oceniania:

egzamin tradycyjny-pisemny: 75.00%

ocena z ćwiczeń: 25.00%

part A: decisions under certainty (example questions: What are preferences and utility? How to measure the intensity of preferences? How to consider many criteria at once? How to choose the right option from a menu?)

part B: decisions under risk (What is risk? How to measure risk and attitudes towards risk? Does the rational man play the roulette, insure from the flood, place bets on the score of a sport event?)

Decision theory deals with the foundations of classical and contemporary economics. This lecture addresses two key questions: a) how SHOULD decisions be made and b) how decisions ARE made. These two questions determine the focus of the two most important lines of thought in economics, namely the classical approach and the increasingly more popular behavioral approach.

The goal of this course is to acquaint students with the axiomatic approach in economic theory in the areas of decisions made under certainty, involving multiple criteria or made under conditions of risk. We introduce the most important preference representation theorems, that are the cornerstone of modern economics. We discuss the fascinating debate between the economists representing the normative (rational) approach on one side and the behavioral economists representing the descriptive approach. This lecture presents economics as a truly interdisciplinary field, that takes advantage of advanced mathematics and at the same time allows and encourages inspiration taken from psychology and sociology, the field that produces mathematical representation theorems, but also engages in applications and experiments. Student of this course should get to know both sides of the field: the soft one that is exposed in a best-seller books such as Thinking fast and slow by Daniel Kahnemann, Misbehaving by Richard Thaler or The undoing project by Michael Lewis, as well as the formal (rigorous) one that can be found in the best economic journals such as Econometrica or Journal of Political Economy.

Two lectures: Theory of decision I and Theory of decision II provide an overview of the whole decision theory. The division is made according to the thematic issues: TD I: certainty, objective uncertainty, TD II: time, subjective uncertainty, group decisions. Although highly recommended, it is not necessary for the student to take these two lectures in a sequence.

Literatura podstawowa:

1. Lewandowski M., Script in decision theory, http://www.mlewandowski.waw.pl/wp-content/uploads/2016/02/tpd.pdf

2. Gilboa I., Lecture Notes on the Theory of Decision under Uncertainty, http://www.econ.hit-u.ac.jp/~kmkj/uncertainty/Gilboa_Lecture_Notes.pdf

3. Kreps David, Notes on the Theory of Choice, Westview Press, 1988.

4. Noor J., Lecture Notes on Economic Theory and Psychology

5. L.C. van der Gaag, S. Renooij, P. de Waal, Lecture notes in decision theory http://www.cs.uu.nl/docs/vakken/bk/#schema

Literatura uzupełniająca:

1. Fishburn P., Utility theory for decision making

2. Raiffa H., Keeney R. L., Decision Analysis with Multiple Conflicting Objectives, Preferences and Value Tradeoffs, 1976

3. Gilboa I., Lecture Notes for Introduction to DecisionTheory, https://itzhakgilboa.weebly.com/uploads/8/3/6/3/8363317/gilboa_notes_for_introduction_to_decision_theory.pdf

4. Blume L., Halpern J., Decision theory lecture notes, http://www.cs.cornell.edu/courses/cs5846/2014sp/5846-14notes.html

5. Dean M., Topics in Microeconomics - Decision Theory and Evidence, http://www.columbia.edu/~md3405/DT_15.shtml

6. Schmeidler D., Lecture notes on decision theory, http://www.tau.ac.il/~schmeid/PDF/Decision_Theory_Technical_Notes.pdf

Kryteria oceniania:

egzamin tradycyjny-pisemny: 75.00%

ocena z ćwiczeń: 25.00%

part A: decisions under certainty (example questions: What are preferences and utility? How to measure the intensity of preferences? How to consider many criteria at once? How to choose the right option from a menu?)

part B: decisions under risk (What is risk? How to measure risk and attitudes towards risk? Does the rational man play the roulette, insure from the flood, place bets on the score of a sport event?)

Decision theory deals with the foundations of classical and contemporary economics. This lecture addresses two key questions: a) how SHOULD decisions be made and b) how decisions ARE made. These two questions determine the focus of the two most important lines of thought in economics, namely the classical approach and the increasingly more popular behavioral approach.

The goal of this course is to acquaint students with the axiomatic approach in economic theory in the areas of decisions made under certainty, involving multiple criteria or made under conditions of risk. We introduce the most important preference representation theorems, that are the cornerstone of modern economics. We discuss the fascinating debate between the economists representing the normative (rational) approach on one side and the behavioral economists representing the descriptive approach. This lecture presents economics as a truly interdisciplinary field, that takes advantage of advanced mathematics and at the same time allows and encourages inspiration taken from psychology and sociology, the field that produces mathematical representation theorems, but also engages in applications and experiments. Student of this course should get to know both sides of the field: the soft one that is exposed in a best-seller books such as Thinking fast and slow by Daniel Kahnemann, Misbehaving by Richard Thaler or The undoing project by Michael Lewis, as well as the formal (rigorous) one that can be found in the best economic journals such as Econometrica or Journal of Political Economy.

Two lectures: Theory of decision I and Theory of decision II provide an overview of the whole decision theory. The division is made according to the thematic issues: TD I: certainty, objective uncertainty, TD II: time, subjective uncertainty, group decisions. Although highly recommended, it is not necessary for the student to take these two lectures in a sequence.

Literatura podstawowa:

1. Lewandowski M., Script in decision theory, http://www.mlewandowski.waw.pl/wp-content/uploads/2016/02/tpd.pdf

2. Gilboa I., Lecture Notes on the Theory of Decision under Uncertainty, http://www.econ.hit-u.ac.jp/~kmkj/uncertainty/Gilboa_Lecture_Notes.pdf

3. Kreps David, Notes on the Theory of Choice, Westview Press, 1988.

4. Noor J., Lecture Notes on Economic Theory and Psychology

5. L.C. van der Gaag, S. Renooij, P. de Waal, Lecture notes in decision theory http://www.cs.uu.nl/docs/vakken/bk/#schema

Literatura uzupełniająca:

1. Fishburn P., Utility theory for decision making

2. Raiffa H., Keeney R. L., Decision Analysis with Multiple Conflicting Objectives, Preferences and Value Tradeoffs, 1976

3. Gilboa I., Lecture Notes for Introduction to DecisionTheory, https://itzhakgilboa.weebly.com/uploads/8/3/6/3/8363317/gilboa_notes_for_introduction_to_decision_theory.pdf

4. Blume L., Halpern J., Decision theory lecture notes, http://www.cs.cornell.edu/courses/cs5846/2014sp/5846-14notes.html

5. Dean M., Topics in Microeconomics - Decision Theory and Evidence, http://www.columbia.edu/~md3405/DT_15.shtml

6. Schmeidler D., Lecture notes on decision theory, http://www.tau.ac.il/~schmeid/PDF/Decision_Theory_Technical_Notes.pdf

Kryteria oceniania:

egzamin tradycyjny-pisemny: 75.00%

ocena z ćwiczeń: 25.00%

part A: decisions under certainty (example questions: What are preferences and utility? How to measure the intensity of preferences? How to consider many criteria at once? How to choose the right option from a menu?)

part B: decisions under risk (What is risk? How to measure risk and attitudes towards risk? Does the rational man play the roulette, insure from the flood, place bets on the score of a sport event?)

Decision theory deals with the foundations of classical and contemporary economics. This lecture addresses two key questions: a) how SHOULD decisions be made and b) how decisions ARE made. These two questions determine the focus of the two most important lines of thought in economics, namely the classical approach and the increasingly more popular behavioral approach.

The goal of this course is to acquaint students with the axiomatic approach in economic theory in the areas of decisions made under certainty, involving multiple criteria or made under conditions of risk. We introduce the most important preference representation theorems, that are the cornerstone of modern economics. We discuss the fascinating debate between the economists representing the normative (rational) approach on one side and the behavioral economists representing the descriptive approach. This lecture presents economics as a truly interdisciplinary field, that takes advantage of advanced mathematics and at the same time allows and encourages inspiration taken from psychology and sociology, the field that produces mathematical representation theorems, but also engages in applications and experiments. Student of this course should get to know both sides of the field: the soft one that is exposed in a best-seller books such as Thinking fast and slow by Daniel Kahnemann, Misbehaving by Richard Thaler or The undoing project by Michael Lewis, as well as the formal (rigorous) one that can be found in the best economic journals such as Econometrica or Journal of Political Economy.

Two lectures: Theory of decision I and Theory of decision II provide an overview of the whole decision theory. The division is made according to the thematic issues: TD I: certainty, objective uncertainty, TD II: time, subjective uncertainty, group decisions. Although highly recommended, it is not necessary for the student to take these two lectures in a sequence.

Literatura podstawowa:

1. Lewandowski M., Script in decision theory, http://www.mlewandowski.waw.pl/wp-content/uploads/2016/02/tpd.pdf

2. Gilboa I., Lecture Notes on the Theory of Decision under Uncertainty, http://www.econ.hit-u.ac.jp/~kmkj/uncertainty/Gilboa_Lecture_Notes.pdf

3. Kreps David, Notes on the Theory of Choice, Westview Press, 1988.

4. Noor J., Lecture Notes on Economic Theory and Psychology

5. L.C. van der Gaag, S. Renooij, P. de Waal, Lecture notes in decision theory http://www.cs.uu.nl/docs/vakken/bk/#schema

Literatura uzupełniająca:

1. Fishburn P., Utility theory for decision making

2. Raiffa H., Keeney R. L., Decision Analysis with Multiple Conflicting Objectives, Preferences and Value Tradeoffs, 1976

3. Gilboa I., Lecture Notes for Introduction to DecisionTheory, https://itzhakgilboa.weebly.com/uploads/8/3/6/3/8363317/gilboa_notes_for_introduction_to_decision_theory.pdf

4. Blume L., Halpern J., Decision theory lecture notes, http://www.cs.cornell.edu/courses/cs5846/2014sp/5846-14notes.html

5. Dean M., Topics in Microeconomics - Decision Theory and Evidence, http://www.columbia.edu/~md3405/DT_15.shtml

6. Schmeidler D., Lecture notes on decision theory, http://www.tau.ac.il/~schmeid/PDF/Decision_Theory_Technical_Notes.pdf

Kryteria oceniania:

egzamin tradycyjny-pisemny: 75.00%

ocena z ćwiczeń: 25.00%