Book contents
- Making Decisions: Analytics, Cognition, and Application
- Making Decisions: Analytics, Cognition, and Application
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Acknowledgments
- Copyright Acknowledgements
- Part I Analytics: Probability, Evaluation, Decision Trees, and Strategies for Decision Making
- 1 Introduction to Decision Theory and Decision Making
- 2 Thinking Like a Gambler: For All the Gambles of Life
- 3 Using Decision Trees to See through the Forest Ahead
- 4 Strategies for Decision Making in an Environment of Risk: How to Get the Most and Avoid the Worst, No Matter What
- Introduction to Part II: Cognitive Processes of Decision Making
- Part III Applications, Examples, and Selected Topics
- References
- Index
- References
2 - Thinking Like a Gambler: For All the Gambles of Life
from Part I - Analytics: Probability, Evaluation, Decision Trees, and Strategies for Decision Making
Published online by Cambridge University Press: 23 October 2025
Book contents
- Making Decisions: Analytics, Cognition, and Application
- Making Decisions: Analytics, Cognition, and Application
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Acknowledgments
- Copyright Acknowledgements
- Part I Analytics: Probability, Evaluation, Decision Trees, and Strategies for Decision Making
- 1 Introduction to Decision Theory and Decision Making
- 2 Thinking Like a Gambler: For All the Gambles of Life
- 3 Using Decision Trees to See through the Forest Ahead
- 4 Strategies for Decision Making in an Environment of Risk: How to Get the Most and Avoid the Worst, No Matter What
- Introduction to Part II: Cognitive Processes of Decision Making
- Part III Applications, Examples, and Selected Topics
- References
- Index
- References
Summary
Decisions are often made in an environment of risk, where the decision maker considers probabilities and possible outcomes. But in order to make a decision under risk, the decision maker must first determine the probabilities of the possible outcomes.
Through experience and observation, people estimate the probability of future events. The probability of an event can be determined as the number of instances of the particular event divided by the total number of possible events. With the tossing of a coin, there are two possible outcomes – a head or a tail – and the probability of either one is ½ or .5. Games of chance, including roulette and lotteries, provide clear examples of how probabilities can be calculated.
When probabilities and outcomes are known, expected value can be calculated and decision makers can use expected value when they analyze possible courses of action and make a decision.
Information
- Type
- Chapter
- Information
- Making Decisions: Analytics, Cognition, and Application , pp. 12 - 27Publisher: Cambridge University PressPrint publication year: 2025
References
Recommended Reading:
Duke, A. (2019). Thinking in bets: Making smarter decisions when you don’t have all the facts. Penguin.Google Scholar
Accessibility standard: WCAG 2.0 A
Why this information is here
This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.Accessibility Information
The HTML of this chapter
conforms to version 2.0 of the
Web Content Accessibility Guidelines
(WCAG), ensuring core accessibility principles are addressed and meets the basic
(A)
level of WCAG compliance, addressing essential accessibility barriers.
Content Navigation
Table of contents navigation
Allows you to navigate directly to chapters, sections, or non‐text items through a linked table of contents, reducing the need for extensive scrolling.
Allows you to navigate directly to chapters, sections, or non‐text items through a linked table of contents, reducing the need for extensive scrolling.
Index navigation
Provides an interactive index, letting you go straight to where a term or subject appears in the text without manual searching.
Provides an interactive index, letting you go straight to where a term or subject appears in the text without manual searching.
Reading Order & Textual Equivalents
Single logical reading order
You will encounter all content (including footnotes, captions, etc.) in a clear, sequential flow, making it easier to follow with assistive tools like screen readers.
You will encounter all content (including footnotes, captions, etc.) in a clear, sequential flow, making it easier to follow with assistive tools like screen readers.
Short alternative textual descriptions
You get concise descriptions (for images, charts, or media clips), ensuring you do not miss crucial information when visual or audio elements are not accessible.
You get concise descriptions (for images, charts, or media clips), ensuring you do not miss crucial information when visual or audio elements are not accessible.
Full alternative textual descriptions
You get more than just short alt text: you have comprehensive text equivalents, transcripts, captions, or audio descriptions for substantial non‐text content, which is especially helpful for complex visuals or multimedia.
You get more than just short alt text: you have comprehensive text equivalents, transcripts, captions, or audio descriptions for substantial non‐text content, which is especially helpful for complex visuals or multimedia.
Visual Accessibility
Use of colour is not sole means of conveying information
You will still understand key ideas or prompts without relying solely on colour, which is especially helpful if you have colour vision deficiencies.
You will still understand key ideas or prompts without relying solely on colour, which is especially helpful if you have colour vision deficiencies.
Structural and Technical Features
ARIA roles provided
You gain clarity from ARIA (Accessible Rich Internet Applications) roles and attributes, as they help assistive technologies interpret how each part of the content functions.
You gain clarity from ARIA (Accessible Rich Internet Applications) roles and attributes, as they help assistive technologies interpret how each part of the content functions.