Studies in Systems, Decision and Control

Bounded Rationality in Decision Making Under Uncertainty: Towards Optimal Granularity

Authors: Lorkowski, Joe, Kreinovich, Vladik

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  • Explains seemingly irrational human decision-making by taking into account our limited ability to process information
  • Shows with several examples that optimization under granularity restriction leads to observed human decision-making
  • Demonstrates that granularity helps to explain seemingly irrational human decision-making
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eBook 101,14 €
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  • ISBN 978-3-319-62214-9
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Hardcover 124,79 €
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  • ISBN 978-3-319-62213-2
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  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
Softcover 124,79 €
price for Spain (gross)
  • ISBN 978-3-319-87260-5
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  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
About this book

This book addresses an intriguing question: are our decisions rational? It explains seemingly irrational human decision-making behavior by taking into account our limited ability to process information. It also shows with several examples that optimization under granularity restriction leads to observed human decision-making. Drawing on the Nobel-prize-winning studies by Kahneman and Tversky, researchers have found many examples of seemingly irrational decisions: e.g., we overestimate the probability of rare events.

Our explanation is that since human abilities to process information are limited, we operate not with the exact values of relevant quantities, but with “granules” that contain these values. We show that optimization under such granularity indeed leads to observed human behavior. In particular, for the first time, we explain the mysterious empirical dependence of betting odds on actual probabilities.

This book can be recommended to all students interested in human decision-making, to researchers whose work involves human decisions, and to practitioners who design and employ systems involving human decision-making —so that they can better utilize our ability to make decisions under uncertainty.

Table of contents (7 chapters)

Table of contents (7 chapters)
  • Human Decisions Are Often Suboptimal: Phenomenon of Bounded Rationality

    Lorkowski, Joe (et al.)

    Pages 1-7

  • Towards Explaining Specific Examples of Suboptimal (and Often Seemingly Irrational) Human Decisions

    Lorkowski, Joe (et al.)

    Pages 9-23

  • Towards Explaining Other Aspects of Human Decision Making

    Lorkowski, Joe (et al.)

    Pages 25-67

  • Towards Explaining Heuristic Techniques (Such as Fuzzy) in Expert Decision Making

    Lorkowski, Joe (et al.)

    Pages 69-81

  • Predicting How Bounded Rationality Will Affect the Quality of Future Decisions: Case Study

    Lorkowski, Joe (et al.)

    Pages 83-87

Buy this book

eBook 101,14 €
price for Spain (gross)
  • ISBN 978-3-319-62214-9
  • Digitally watermarked, DRM-free
  • Included format: PDF, EPUB
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover 124,79 €
price for Spain (gross)
  • ISBN 978-3-319-62213-2
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
Softcover 124,79 €
price for Spain (gross)
  • ISBN 978-3-319-87260-5
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
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Bibliographic Information

Bibliographic Information
Book Title
Bounded Rationality in Decision Making Under Uncertainty: Towards Optimal Granularity
Authors
Series Title
Studies in Systems, Decision and Control
Series Volume
99
Copyright
2018
Publisher
Springer International Publishing
Copyright Holder
Springer International Publishing AG
eBook ISBN
978-3-319-62214-9
DOI
10.1007/978-3-319-62214-9
Hardcover ISBN
978-3-319-62213-2
Softcover ISBN
978-3-319-87260-5
Series ISSN
2198-4182
Edition Number
1
Number of Pages
IX, 164
Topics