Computational Model for Human Decision Making: A Study of Prospect Theory

Abstract

Decision making can be defined as a process of selecting best alternatives among several possible alternatives. In this paper, two decision making theories are compared with the decision of several humans. Decision making theories used in this paper are Expected Utility Theory (EUT) and Prospect Theory (PT). Results are obtained and compared over the examples of gambles. Each example of gamble offers the choice with certainty and uncertainty. The purpose of this paper is to explain how people behave while making decision and how decision making theories predict the decision of peoples.