ABSTRACT
If you believe in free will, then you believe that people are capable of making decisions. But how does a person make decisions? Sometimes, when presented with a decision problem, one can determine precisely what choices exist, ascertain what the outcome of every choice is, and evaluate these choices on a linear scale (by, for example, measuring the dollar value of each outcome). In such cases, decision-making is easy. One simply opts for the choice that maximizes benefit. But in the real world, decision-making is more difficult, because one faces uncertainty that may be of two types. The first type is uncertainty about nature. Nature may be thought of as random and unconcerned with our welfare. For example, to decide whether to carry an umbrella, we should factor in the probability of rain. The second type is uncertainty about people. A person, unlike nature, may be our friend or our adversary, and a person may have a stake in the decision process that is unrelated to ours. We assume that other people do not act randomly but rather act in their own self-interest. In other words, they act like we do. For example, to decide how to negotiate a treaty, we need to contemplate the point of view of other signatories.
