Qualitative Analysis of Fundamental Theoretical Tools Employed in Modelling Decision Making Problems

The objective of this paper is to analyze fundamental theoretical tools employed in modelling decision making problems which involve multivariate risks. By exploiting the richness of the literature, we highlight the qualities as well as the “weaknesses” specific to a wide class of decision models. These are not free from critiques, especially when real world problems are considered. A little effort has been spent on improving this type of models, often conceptually convenient but not always adequate. This study emphasizes the need for aconsistent framework to cover a broad area of research on the strategic behavior of potentially risk-averter policy-makers in a controlled dynamic stochastic environment. Work remains to be done in this exciting area.