Behavioural decision models: A calculus for uncertainty

The rapid development of behavioural decision theory has led to the possibility of more wide-spread application, particularly to operations research problems. This paper explores decisions under uncertainty, that is an environment where explicit data on the probability distributions of nondeterministic parameters are lacking. Starting with a brief introduction to modelling human information processing, the paper reviews the field: it presents the theoretical underpinnings, a classification, and an analysis of the different types of models. Finally, it illustrates the concepts with past and present research, using examples from new venture analysis, risk assessment in international investments, and production planning.