The Unconscionability of a Liquidated Damage Clause: A Practical Application of Behavioral Decision Theory.

Behavioral decision theory is a descriptive psychological theory of human judgment, decision making, and behavior that can be applied to political science. Behavioral decision theory is closely related to behavioral economics and behavioral finance. Behavioral economics is an attempt to understand actual human economic behavior, and behavioral finance studies human behavior in financial markets. Research on people’s decision making represents an important part of these fields, in which various aspects overlap with the scope of behavioral decision theory. Behavioral decision theory focuses on the decision-making phenomena that are broadly divisible into those under certainty, those under risk, and others under uncertainty that includes ambiguity and ignorance. What are the theoretical frameworks that could be used to explain the decision-making phenomenon? Although numerous theories related to decision making have been developed, they are, in essence, often broadly divided into two types: normative theory and descriptive theory. The former is intended to support rational decision making. The latter describes how people actually make decisions. Both normative and descriptive theories reflect the nature of actual human decision making to a degree. Even descriptive theory seeks a certain level of rationality in actual human decision making. Consequently, the two are mutually indistinguishable. Nonetheless, a major example of normative theory is regarded as the system of utility theory that is widely used in economics. A salient example of descriptive theory is behavioral decision theory. Utility theory has numerous variations, such as linear and nonlinear utility theories. Most theories have established axioms and mathematically developed principles. In contrast, behavioral decision theory covers a considerably wide range of variations of theoretical expressions, including theories that have been developed mathematically (such as prospect theory) and those expressed only with natural language (such as multiattribute decision-making process models). Behavioral decision theory has integrated the implications of the normative theory, descriptive theory, and prescriptive theory that help people to make better decisions.

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Agricultural entrepreneurship fostering from behavioral decision theory perspective. Celebrity branding impact on financial and non-financial motivation

European Journal of Finance ◽

10.1080/1351847x.2020.1841663 ◽

2020 ◽

pp. 1-17

Author(s):

Natalia Dobryagina

Keyword(s):

Decision Theory ◽

Behavioral Decision Theory ◽

Behavioral Decision ◽

Agricultural Entrepreneurship

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A Behavioral Decision Theory Approach to Modeling Dyadic Trust in Superiors and Subordinates

Psychological Reports ◽

10.2466/pr0.1984.55.1.19 ◽

1984 ◽

Vol 55 (1) ◽

pp. 19-28 ◽

Cited By ~ 279

Author(s):

John K. Butler ◽

R. Stephen Cantrell

Keyword(s):

Decision Theory ◽

Behavioral Decision Theory ◽

Theory Approach ◽

Dyadic Trust ◽

Behavioral Decision ◽

Management Students

The relative importances of five determinants of dyadic trust (integrity, competence, consistency, loyalty, and openness) were investigated from two perspectives: trust in superiors and trust in subordinates. Two experiments were designed from research on behavioral decision theory. The participants, 78 undergraduate management students, responded to cues that described hypothetical superiors (Exp. 1) and subordinates (Exp. 2). Responses indicated the amount of trust held in each of 32 superiors and 32 subordinates. Integrity, competence, and consistency were stronger than loyalty or openness as determinants of trust in one's superiors and in one's subordinates. There were no differences in the importance of any of the determinants of trust in one's subordinates versus one's superiors. Method considerations are discussed.

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