A re-examination of the normative-descriptive distinction in decision analysis

This note re-examines the notions of normative, descriptive, and prescriptive approaches to decision making. It expands the notion of normative rules to three sets of principles of decision analysis: qualitative imperatives (e.g. ‘a decision maker should consider alternatives’), formal axioms of rationality (e.g. transitivity), and prescriptive guidelines (e.g. avoiding relative risk aversion). Seen in this context, axioms of rationality and prescriptive guidelines can coexist and prescription is not any longer interpreted as the normative tempered by the descriptive. Descriptive findings are relevant to all three classes of decision-analytic principles, but they are most useful for designing and testing effective prescriptive guidelines.