Re: [Talk] decision theory
http://www.infra.kth.se/~soh/decisiontheory.pdf
p.23
In a decision we choose between different alternatives(options).
Alternatives are typically courses of action that are open to
the decision-maker at the time of the decision.
The effect of a decision depends not only on our choice of an
alternative and how we carry it through. It also depends on factors
outside of the decision-maker's control. Some of these extraneous
factors are known, they are the background information that the
decision-maker has. Others are unknown. They depend on what other
persons will do and on features of nature that are unknown to the decision-
maker.
The standard format for the evaluation-choice routine in decision theory
is that of a decision matrix. In a decision matrix, the alternatives
open to the decision-maker are tabulated against the possible states of
nature. The alternatives are represented by the rows of the matrix, and
the states of nature by the columns.
In order to use a matrix to analyze a decision, we need, in addition
to the matrix itself, (1)information about how the outcomes are valued,
and (2)information pertaining to which of the states of nature will be
realized.
The most common way to represent the values of outcomes is to assign
utilities to them. Verbal descriptions of outcomes can then be replaced
by utility values in the matrix.
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