Blaise Pascal published his Pensées in 1670, introducing a famous wager about the existence of God. This text marked an early moment when probability theory began to influence how humans thought about choices under uncertainty.
Daniel Bernoulli published Exposition of a New Theory on the Measurement of Risk in 1738 to challenge existing views on financial value. He used the St. Petersburg paradox to show that people do not always choose based on pure monetary gain.
John von Neumann and Oskar Morgenstern later formalized these concepts in the 1940s through Game Theory. Their work established a rational basis for decision-making under uncertainty but ignored human psychological factors.
Prospect theory modified expected utility theory to account for psychological factors after Daniel Kahneman and Amos Tversky found three regularities in actual human decision-making during their research. They observed that losses loom larger than gains, meaning people feel pain from losing money more intensely than pleasure from gaining it.
An electronic simulation room at the Naval War College hosted a 1958 wargame featuring large maps showing landmass outlines and firing solutions. These exercises analyze social decisions involving multiple actors who respond strategically to one another.