The crucial question in decision theory is "how one decides to cope with the problem of subjective probabilities," William J. Fellner, Seymour H. Know Professor of Economics at Yale University, said here yesterday.
His lecture, sponsored by the Department of Economics, dealt with "Personalistic Probabilities and the Theory of Decision Making." Subjective probabilities are the measure of how likely a person thinks an event is, as judged by the decisions he makes on the basis of his beliefs.
Fellner characterized decision theory as a "specific type of normative theory which also possesses some of the characteristics of empirical theory."
It is partially empirical, he explained, because it is based on observed behavior, but, in part, it is normative, since some of the features of the observed behavior are stressed more than others.
If a decision theory is successful, it changes behavior but not goals. "Although it can induce people to follow their objectives more consistently, it need not impose upon them new objectives," Fellner continued.
In dealing with the problem of subjective probabilities, he examined some decision rules. One problem of subjective probability is that the traits of the individual's system can swamp his probability judgments.
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