Single Person Decision Theory and Efficient Market Theory Essay

Single Person Decision Theory and Efficient Market Theory - Essay Example The theory trusts the decision making capability of an individual and holds the belief that the decision maker is equipped with extreme computational expertise. According to the single person decision theory, investors should be completely made aware of the potential threats of investment along with the benefits that are frequently advertised. Not just this, the investor should also be made aware of the possible strategies that can be implemented to combat the threat. This requires the experts to be experienced enough to identify the potential threats that can be encountered as a result of the investment, and propose the solutions accordingly. Some of the key features of the single person decision theory are as follows: 1. It is essentially a model that formally explains the best way important decisions can be made and information can be considered. 2. It takes investing parties as risk averse. 3. It considers new information important enough to bring change in the decisions. 4. When new information is found, it may alter the original beliefs of the individuals responsible for decision making. 5. It explains the way an individual can make rational decisions while being in the state of uncertainty (Scott 60). 6. The decision maker selects the most appropriate choice from a whole range of alternatives.