In this section, we consider a single choice under uncertainty: the subject must choose one of a number of possible actions, each of which leads to an uncertain reward. The reward depends on the act and the true state of nature. How does a subject use her beliefs about the state of nature and her relative preferences over rewards to choose her act?
We use the following terminology. An act is something the subject can choose to do. A choice or decision refers to the choosing of a single act from a set. A reward is whatever the subject can receive once the state of nature is revealed.