Subjective expected utility: A model of decision-making

This chapter describes a model of decision-making—subjective expected utility (SEU) model. Studying the prescriptive and descriptive validity of this model is the pre­occupation of researchers in a diffuse field known as “behavioral decision theory” (BDT). SEU model reduces the universe of decisions to a common set of primitives about which universal truths in due time can be derived. A second enticement is the presence of an axiomatic basis for these models. Any individual who subscribes to a small set of reasonable rules should behave according to the model. Prescriptive reasonableness is presumably a necessary condition for the descriptive validity of a theory of conscious behavior. The secrecy of its longevity lies in the fact that the model (1) expresses some fundamental truth in some situations, (2) has a remarkable ability to be close to the mark in situations where its underlying logic is clearly inappropriate, and (3) has proponents of heroic tenacity.