Decision theory and decision making are multidisciplinary topics. Decision theory includes psychology, especially cognitive psychology, because decisions are cognitive processes. Decision theory also includes math, especially probability, as people often make decisions based on likelihood. Decision making is an applied topic pertaining to business, engineering, science, politics, other disciplines, and of course to personal decisions.
Descriptive models of decision theory explain decisions as cognitive processes, how and why people make the choices they do. Normative decision models describe how people should conceptualize a decision. Prescriptive models include mathematically based analyses that provide actionable solutions to real-world problems.
Decisions are made in one of three environments. Under certainty, the decision maker can make a choice and be sure what the outcome will be. Under risk, the decision maker will make a choice knowing in advance the probabilities of various outcomes. Under uncertainty, the possible outcomes and probabilities are unknown.
