Utility, Games, and Narratives

Abstract

This chapter provides a general overview of theories and tools to model individual and collective decision-making. In particular, stress is laid on the interaction of several decision-makers.A substantial part of this chapter is devoted to utility maximization and its application to collective decision-making, Game Theory. However, the pitfalls of utility maximization are thoroughly discussed, and the radically alternative approach of viewing decision-making as constructing narratives is presented with its emerging computational tools. In detail, the chapter is structured as follows.Section (2) presents utility maximization and Game Theory with its Nash equilibria. The most important prototypical games are expounded in this section. Section (3) presents games that are not concerned with Nash equilibria. Section (4) illustrates the main paradoxes of utility maximization, as well as the patches that have been proposed. Section (5) expounds the vision of decision-making as constructing a narrative, supported by a rare empirical case-study. Section (6) aims at providing computational tools for this otherwise literary vision of decision-making. Finally, section (7) concludes by assessing the pros and cons of competing approaches.This chapter touches so many issues that a complete list of references to the relevant litterature would possibly be longer than the chapter itself. Instead of references, the names of the most important scholars in each field have been made, so the interested reader should be able to reconstruct the relevant bibliography by herself. A few exceptions have been made for very specific works, that have been mentioned in footnotes.