Measurement and decision making at the University of Michigan in the 1950s and 1960s.

This paper discusses the development of mathematical psychology, decision theory, and behavioral decision research at the University of Michigan in the 1950s and 1960s. It focuses on the question how to understand the connection to economics these three psychological programs considered, and provides a background for understanding subsequent developments of Kahneman and Tversky’s work in the 1970s, and the following rise of behavioral economics from the 1980s onwards. I define the historical and organizational characteristics of the University of Michigan and its department of psychology and explain why the Institute of Social Research (ISR) is remarkably absent in the history discussed in this paper. Subsequently, I describe the background and development of mathematical psychology and show that it employed a two-faced understanding of psychology as using the human being as measurement instrument to measure human decision behavior. After this, I discuss the background and development of decision theory and behavioral decision research, which employed the same understanding of psychology and were hence closely related to mathematical psychology. I finish by reviewing the close connection between measurement theory and behavioral and decision theories in these psychological programs, and conclude that their frequent references to economics should and should not understood as a close relation to the economic discipline. 1 Email: [email protected]. John Davis, Harro Maas, and Marcel Boumans are gratefully acknowledged for their comments on earlier versions of this paper. Any remaining mistakes are my own.