One-Shot Decision Theory

Abstract

This paper focuses on one-shot (one-time) decision problems, which concern the situations where a decision is experienced only once. Such one-shot decision problems are commonly encountered in business, economics, and social systems. The one-shot decision process comprises two steps. In the first step, a decision maker identifies which state of nature should be taken into account for each alternative among all available states of nature. These identified states of nature are called focus points. Twelve types of focus points are proposed according to a decision maker's attitudes about the possibility of a state of nature and satisfaction resulted by its occurrence. In the second step, a decision maker evaluates the alternatives based on focus points where the consequences provided by all alternatives are compared with each other to obtain the best alternative. The relationships between different focus points are analyzed. An example, which is a newsvendor problem of a new product with a short life cycle, is used to illustrate the one-shot decision. The results of analysis show that the proposed decision models can provide useful insights into understanding different behaviors of decision makers and help the decision maker in finding out the best solution according to his/her attitude about possibility and satisfaction.