On Rational Choice and the Framing of Decisions

2 1. Introduction Making decision is like speaking prose – people do it all the time, knowingly or unknowingly. [D. Kahneman, A. Tversky, Choices, Values, and Frames,p.1]. Almost everything that a human being does involves decisions. Thus, according to D. Kahneman and A. Tversky people all the time take decisions. Now the matter is : how? Well, this is the topic of decision theory. The fact is that modern decision theory has developed, since the middle of the 20th century, through contributions from several academic disciplines. Although it is now clearly an academic subject of its own right, decision theory is typically pursued by researchers identified as economists, statisticians, neuroscientists, psychologists, political and social scientists or philosophers. There is some division of labour between these disciplines. A political scientist is likely to study voting rules and other aspects of collective decision-making. A psychologist is likely to study the behaviour of individuals in decisions, and a philosopher the requirements for rationality in decisions. However, there is a large overlap, and the subject has gained from the variety of methods that researchers with different backgrounds have applied to same or similar problems. From our point of view, we are interested in the cognitive and the psychophysical determinants of choice. And we could talk about many theories of decision making. Before approaching a couple of them we need some distinctions: first, a very common one, between risky and riskless choices. A typical example of decision under risk is the acceptability of a gamble with monetary outcomes and specified probabilities, while a riskless decision could be about the acceptability of a transaction in which a good is exchanged for money. Second, the