The evolution of the economic theory of decision-making


The economic theory of value and prices is strictly interwoven with a theory of human decision-making. Roughly speaking, economists see the economic value of a good as determined by the demand of that good. Therefore, understanding why people decide to demand a good, why they decide to demand a specific quantity of it, or why they decide to pay a certain price for it, is an important part of an economic theory of value.

In the late 19th century, economic decision-making was modelled as the result of utility maximization. Over the last century, however, this rather simple utility-maximization model has been subjected to a number of criticisms, revisions, integrations, and methodological re-interpretations. The state of the art of the economic theory of decision-making could be summarized as follows. The utility-maximization model still constitutes, although in a very sophisticated form, the orthodox economic model of decision-making. But this model is increasingly challenged by other models of decision-making, such as behavioral models and bounded-rationality models, which attempt to capture the complexity of actual human decision making in a way that the utility-maximization model seems incapable to do.

The summer school offers PhD students and young scholars specializing in economics, history of economics, economic methodology and related fields an overview of the evolution of the economic theory of decision-making, beginning with the early, simple utility-maximization model to the more recent and complex behavioral and bounded-rationality models.