Rational Decision-Making Theory

Chapter One

INTRODUCTION

General Introduction

This thesis deals with the application of fuzzy set theory to decision-making problems. The study of decision indicates making decisions. Making decision involves both of how decisions are actually made and how they can be made better or more efficiently; specially in a non-deterministic situation such as analysis of poverty.

Making decision is a part and partial of a human life. It is an accepted part of human life. Consciously or unconsciously everyone makes some decisions every day. Among our day-today decisions, some are habitual, some are casuals and some are deliberate and planned. For examples, what should we eat at breakfast, for lunch, for supper? Should we watch news after the supper,

It also means a ‘whether decision’ making process or yes/no, either/or framework of decision. Here, a Decision maker (DM) weighs pro and con of his/her decisions. This is also known as a classical decision framework. In the classical framework of decision a decision maker (DM) chooses or selects from a finite number of available alternatives, information from an ideal environment. In the deterministic situation, the outcome for each action is determined and ordered precisely. Lee et, al considers that classical decision theory views that the decision maker as acting in the world of complete certainty. [6] .(ref.Li Bin, (2008), The classical model of decision making has been accepted as not providing an accurate account of how people typically make decision, Intertional Journal of business and Management,3:6,pp.151-154. ). A decision maker (DM) makes his/her decision based on the values and preferences under considerations that satisfies DM the most. This model is also known as the utility theory. In utility theory the DM determines which alternative has the maximum utility. For example, Should I buy a cycle? Should I go to market for shopping while it is

For example, the decision to move from one job to another, the decision to get married to so and so, the decision to buy a home in a particular town or location, the decision to have children, the decision to go for engineering course or to join medical course, the decision to estimate poverty, the decision to support a ruling party or to join another party, the decision to join religious life and like so on. In all these practical situations we are encountered with imprecise information. Among all these imprecise information, some are influenced based on the past experiences and some are based on the