What do inferring what a person is thinking or feeling, judging a defendant’s guilt, and navigating a dimly lit room have in common? They involve perceptual uncertainty (e.g., a scowling face might indicate anger or concentration, for which different responses are appropriate) and behavioral risk (e.g., a cost to making the wrong response). Signal detection theory describes these types of decisions. In this tutorial, we show how incorporating the economic concept of utility allows signal detection theory to serve as a model of optimal decision making, going beyond its common use as an analytic method. This utility approach to signal detection theory clarifies otherwise enigmatic influences of perceptual uncertainty on measures of decision-making performance (accuracy and optimality) and on behavior (an inverse relationship between bias magnitude and sensitivity optimizes utility). A “utilized” signal detection theory offers the possibility of expanding the phenomena that can be understood within a decision-making framework.
Lynn, S.K, and L.F. Barrett. 2014. “Utilizing” signal detection theory. Psychological Science, 25(9):1663–1673.