MAT 1374 Lecture Notes - Lecture 9: Bayesian Probability, Utility, Satisficing
15 Sep 2016
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In utility theory, you calculate ev and make your decision. Satisficing- getting above the human threshold for satisfaction. If making an optimal decision takes forever to find, you can find a quick good decision to reach satisfaction. Prospect theory we are sensitive to changes in utilities than we are to absolute quantities (first million you win is more exciting than the ones you win after. We experience the loses are more painful than we experience the gains of pleasure. Regret theory focuses on decision making process and how anticipation plays a role, and not on utility or value. So you may be about to make a decision and instead of calculating value or utility, you anticipate possible outcomes. You anticipate regret and this drives your decisions (i should have bought that insurance, i would have been covered for that accident). Bayesianism: adjust out views after leaning new information. Changing your probabilities based on new information is called conditioning.
