Decision making in social science: general overview

Decision-making models are central in economics and psychology. Finding appropriate models which can approach human decision-making behavior is, as expected, a very challenging task. Economics has for a long time embraced models which are based on a particular axiomatic skeleton. The axioms are thought to be “reasonable” approximations of general decision situations.

A central starting point in preference modeling in economics consists in proving that there exists an equivalence between the preference relation of an object x over an object y, denoted as x > y, if and only if there exists a utility function u(.), which maps a set of objects into R, such that u(x) > u(y). This is not an easy task. However, for a finite set of objects X (to which x and y belong), as any good micro-economic theory textbook will show, the equivalence is quite easy to show. It is substantially more difficult to show when the set X is countable infinite or uncountable. As David Kreps [1] indicates (p. 24), for an uncountable X there may exist a preference relation >, but this does not mean that there exists a utility function u(.)! The lexicographic preference relation is an example.