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Home > QFINANCE Dictionary > Definition of decision theory

Definition of

decision theory

General Management

analysis of how people determine course of action a body of knowledge that attempts to describe, analyze, and model the process of decision making and the factors influencing it. Decision theory encompasses both formal mathematical and statistical approaches to solving decision problems, using quantitative techniques such as probability and game theory, and more informal behavioral approaches. It is used to inform and assist decision making in organizations.

Related definitions of "decision theory"

Recommended Further Reading (Term count)
  • Moving Away from Traditional Budgeting
    by Lawrence Phillips
    Dr Lawrence Phillips, Visiting Professor of Decision Science at the London School of Economics and a director of Facilitations Ltd, is a leading expert on ways in which organizations can improve their decision-making. He has long been fascinated by the challenges associated with deciding how best to deploy limited resources across a range of possible projects and getting people to buy into the outcome—the quintessential budgeting and indeed...
  • A Behavioral Theory of the Firm
    Richard M. Cyert and James G. March (2nd ed 1992, originally 1963)
    A classic work on organizational theory and behavior by two highly respected academics. Provides a useful introduction to the complex world of decision-making, and evaluates traditional approaches and real-world alternatives. Describes the series of steps that the rational model of decision-making is based on.  
  • Peter L. Bernstein
    The foremost chronicler of risk
    Peter L. Bernstein is a prolific and award-winning author on finance and risk, and founder and president of Peter L. Bernstein, Inc., an international consultancy for institutional investors and corporations. After serving as an intelligence officer in Europe during World War II, he became a member of the research staff at the Federal Reserve Bank of New York. He then taught economics at Williams College and the New School for Social Research in...
decision theory - Related Articles

  • Continuous Auditing: Putting Theory into Practice

    Best Practice

    Although the decision could be made to provide continuous assurance on only a very few risks and their controls, a larger program that addresses more risks and controls will generally provide a higher return on the investment.
    By Norman Marks

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Definitions of ’decision theory’ and meaning of ’decision theory’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’decision theory’ and other financial terms with our online QFINANCE Financial Dictionary.

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