Behavioral Decision Research: Descriptive and Prescriptive Perspectives

Behavioral Decision Research has provided a deep understanding of how humans form judgments and make choices, since its emergence in the 1950s. Underlying this body of research is the contrast of actual decision making with the paragons of rationality, which provide the idealized model on how humans should decide. Starting with the Ellsberg and Allais paradoxes and followed by Tversky & Kahneman’s seminal research on biases and heuristics in judgments, it has been clear that no real person is fully rational. Exploring deviations from rationality has been a major focus of Behavioral Decision Research. This research has two quite distinct branches: descriptive and prescriptive. Descriptive Behavioral Decision Research examines deviations from rationality and strives to develop theories or models to explain these deviations. Prescriptive Behavioral Decision Research also starts from observed deviations from rationality, but rather than developing theories of models to explain these deviations, it develops and tests tools or analytical methods to correct such deviations. The distinction between the descriptive and prescriptive perspectives in Behavioral Decision Research has often been implicit and blurred in the Decision Sciences literature. In this chapter we aim to address this conceptual lacuna, proposing a taxonomy for these two perspectives in Behavioral Decision Research and describing their main achievements.