In this paper I examine Don Ross’s application of unificationism as a methodological criterion of theory appraisal in economics and cognitive science. Against Ross’s critique that explanations of the preference reversal phenomenon by the ‘heuristics and biases’ programme is ad hoc or ‘Ptolemaic’, I argue that the compatibility hypothesis, one of the explanations offerd by this programme, is theoretically and empirically well-motivated. A careful examination of this hypothesis suggests several strengths of a procedural approach to modelling cognitive processes underlying individual (...) decision making, compared to a multiple-agent approach which Ross promotes. I argue that the debate between economists and psychologists are both theoretical and empirical, but cannot be resolved by appealing to the ideal of unification. (shrink)

This article assesses two major conceptual arguments against theories of choice.The first argument concerns the circularity of belief-desire psychology, on which decision theory is based. The second argument concerns the normativity arising from the concept of rationality. Each argument is evaluated against experimental practice in economics and psychology, and it is concluded that both arguments fail to establish their skeptical conclusion that there can be no science of intentional human actions.

We introduce a “reason-based” framework for explaining and predicting individual choices. It captures the idea that a decision-maker focuses on some but not all properties of the options and chooses an option whose motivationally salient properties he/she most prefers. Reason-based explanations allow us to distinguish between two kinds of context-dependent choice: the motivationally salient properties may (i) vary across choice contexts, and (ii) include not only “intrinsic” properties of the options, but also “context-related” properties. Our framework can accommodate boundedly rational (...) and sophisticatedly rational choice. Since properties can be recombined in new ways, it also offers resources for predicting choices in unobserved contexts. (shrink)

Expected Utility Theory (EUT) has anomalies when interpreted descriptively and tested empirically. Experiments show that the way in which options are formulated is, in most cases, relevant for decision-making. This kind of anomaly is directly related, however, not with a proper axiom of EUT but rather with the logical principle of extensionality and its decision theoretic version: the principle of invariance. This paper focuses on the phenomenon of framing effects (FE) and the associated failures of invariance. FE arise when different (...) descriptions of the same object lead to different preferences, beliefs, or choices. A formal reconstruction of the Gain–Loss (G-L) frame is proposed, expanding the domain of standard decision theory to incorporate not only prospects but also descriptions of prospects. The system is extended by adding non-monotonic logical resources so as to account for the ceteris paribus character of FE. Finally, the same method is applied to sketching a formal representation for an anomalous case that involves subjective probabilities. The logical method is a general one that can be applied to most cases of FE. The philosophical consequences of the strategy pursued are also discussed. (shrink)

I connect commodification arguments to an empirical literature, present a mechanism by which commodification may occur, and show how this may restrict the range of goods and services that are subject to commodification, therefore having implications for the use of commodification arguments in political theory. Commodification arguments assert that some people’s trading a good or service can debase it for third parties. They consist of a normative premise, a theory of value, and an empirical premise, a mechanism whereby some people’s (...) market exchange affects how goods can be valued by others. Hence, their soundness depends on the existence of a suitable candidate mechanism for the empirical premise. The ‘motivation crowding effect’ has been cited as the empirical base of commodification. I show why the main explanations of motivation crowding – signaling and over-justification – do not provide mechanisms that could underpin the empirical premise. In doing this, I reveal some requirements on any candidate me... (shrink)

“Das Adam Smith Problem” is the name given by eighteenth-century German scholars to the question of how to reconcile the role of self-interest in the Wealth of Nations with Smith’s advocacy of sympathy in Theory of Moral Sentiments. As the discipline of economics developed, it focused on the interaction of selfish agents, pursuing their private interests. However, behavioral economists have rediscovered the existence and importance of multiple motivations, and a new Das Adam Smith Problem has arisen, of how to accommodate (...) self-regarding and pro-social motivations in a single system. This question is particularly important because of evidence of motivation crowding, where paying people can backfire, with payments achieving the opposite effects of those intended. Psychologists have proposed a mechanism for the crowding out of “intrinsic motivations” for doing a task, when payment is used to incentivize effort. However, they argue that pro-social motivations are different from these intrinsic motivations, implying that crowding out of pro-social motivations requires a different mechanism. In this essay I present an answer to the new Das Adam Smith problem, proposing a mechanism that can underpin the crowding out of both pro-social and intrinsic motivations, whereby motivations are prompted by frames and motivation crowding is underpinned by the crowding out of frames. I explore some of the implications of this mechanism for research and policy. (shrink)

In the literature of collective intentions, the ‘we-intentions’ that lie behind cooperative actions are analysed in terms of individual mental states. The core forms of these analyses imply that all Nash equilibrium behaviour is the result of collective intentions, even though not all Nash equilibria are cooperative actions. Unsatisfactorily, the latter cases have to be excluded either by stipulation or by the addition of further, problematic conditions. We contend that the cooperative aspect of collective intentions is not a property of (...) the intentions themselves, but of the mode of reasoning by which they are formed. We analyse collective intentions as the outcome of team reasoning, a mode of practical reasoning used by individuals as members of groups. We describe this mode of reasoning in terms of formal schemata, discuss a range of possible accounts of group agency, and show how existing theories of collective intentions fit into this framework. (shrink)

This article surveys the latest research on risky-choice framing effects, focusing on the implications for rational decision-making. An influential program of psychological research suggests that people's judgements and decisions depend on the way in which information is presented, or ‘framed’. In a central choice paradigm, decision-makers seem to adopt different preferences, and different attitudes to risk, depending on whether the options specify the number of people who will be saved or the corresponding number who will die. It is standardly assumed (...) that such responses violate a foundational tenet of rational decision-making, known as the principle of description invariance. We discuss recent theoretical and empirical research that challenges the dominant ‘irrationalist’ narrative. These approaches typically pay close attention to how decision-makers represent decision problems (including their interpretation of numerical quantifiers or predicate choice) and they highlight the need for a more robust characterization of the description invariance principle. We conclude by indicating avenues for future research that could bring us closer to a complete—and potentially rationalizing—explanation of framing effects. (shrink)

Decision-making typically requires judgments about causal relations: we need to know the causal effects of our actions and the causal relevance of various environmental factors. We investigate how several individuals' causal judgments can be aggregated into collective causal judgments. First, we consider the aggregation of causal judgments via the aggregation of probabilistic judgments, and identify the limitations of this approach. We then explore the possibility of aggregating causal judgments independently of probabilistic ones. Formally, we introduce the problem of causal-network aggregation. (...) Finally, we revisit the aggregation of probabilistic judgments when this is constrained by prior aggregation of qualitative causal judgments. (shrink)

Framing effects occur when different descriptions of the same decision problem give rise to divergent decisions. They can be seen as a violation of the decisiontheoretic version of the principle of extensionality (PE). The PE in logic means that two logically equivalent sentences can be substituted salva veritate. We explore what this notion of extensionality becomes in decision contexts. Violations of extensionality may have rational grounds. Based on some ideas proposed by the psychologist Craig McKenzie and colleagues, we contend that (...) framing effects are justified when the selection of one particular frame conveys choice relevant information. We first discuss this idea from a philosophical point of view, and proceed next to formalize it first in the context of the Bolker–Jeffrey decision theory. Finally, we extend the previous analysis to non-expected utility theories using the Biseparable Preference model introduced by Ghirardato and Marinacci (2001) and therefore show that the analysis is independent of the assumptions of Bayesian decision theory. (shrink)

The paper is an addition to the intensionalist approach to decision theory, with emphasis on game theoretic modelling. Extensionality in games is an a priori requirement that players exhibit the same behavior in all algebraically equivalent games on pain of irrationality. Intensionalism denies that it is always irrational to play differently in differently represented but algebraically equivalent versions of a game. I offer a framework to integrate game non-extensionality with the more familiar idea of linguistic non-extensionality from philosophy of language, (...) followed by applications of it based on toy examples of well-known game models. I argue that the notion of what I call “Intensional Nash Equilibrium” is, in effect, very useful in understanding human decision-making. (shrink)

Rational choice theory analyzes how an agent can rationally act, given his or her preferences, but says little about where those preferences come from. Preferences are usually assumed to be fixed and exogenously given. Building on related work on reasons and rational choice, we describe a framework for conceptualizing preference formation and preference change. In our model, an agent's preferences are based on certain "motivationally salient" properties of the alternatives over which the preferences are held. Preferences may change as new (...) properties of the alternatives become salient or previously salient properties cease to be salient. Our approach captures endogenous preferences in various contexts and helps to illuminate the distinction between formal and substantive concepts of rationality, as well as the role of perception in rational choice. (shrink)

We suscribe to an account of framing-effects in decision theory in terms of an inference to a background informationa by the hearer when a speaker uses a certain frame while other equivalent frames were also available. This account was sketched by Craig McKenzie. We embed it in Bolker-Jeffrey decision model - one main reason of this is that this latter model makes preferences bear on propositions. We can deduce a given anomaly or cognitive bias in a formal decision theory. This (...) leads to some philosophical considerations on the relationship between the rationality of preferences and the sensitivity to descriptions or labels of states of affairs in decision-making. (shrink)

We explore the idea that a group or ‘team’ of individuals can be an agent in its own right and that, when this is the case, individual team members use team reasoning, a distinctive mode of reasoning from that of standard decision theory. Our approach is to represent team reasoning explicitly, by means of schemata of practical reasoning in which conclusions about what actions should be taken are inferred from premises about the decision environment and about what agents are seeking (...) to achieve. We use this theoretical framework to compare team reasoning with the individual reasoning of standard decision theory, and to compare various theories of team agency and collective intentionality. (shrink)

One of the conceptual limitations of the orthodox game theory is its inability to offer definitive theoretical predictions concerning the outcomes of noncooperative games with multiple rationalizable outcomes. This prompted the emergence of goal-directed theories of reasoning – the team reasoning theory and the theory of hypothetical bargaining. Both theories suggest that people resolve non-cooperative games by using a reasoning algorithm which allows them to identify mutually advantageous solutions of non-cooperative games. The primary aim of this thesis is to enrich (...) the current debate on goaldirected reasoning theories by studying the extent to which the principles of the bargaining theory can be used to formally characterize the concept of mutual advantage in a way which is compatible with some of the conceptually compelling principles of orthodox game theory, such as individual rationality, incentive compatibility, and non-comparability of decision-makers’ personal payoffs. I discuss two formal characterizations of the concept of mutual advantage derived from the aforementioned goal-directed reasoning theories: A measure of mutual advantage developed in collaboration with Jurgis Karpus, which is broadly in line with the notion of mutual advantage suggested by Sugden, and the benefit-equilibrating bargaining solution function, which is broadly in line with the principles underlying Conley and Wilkie’s solution for Pareto optimal point selection problems with finite choice sets. I discuss the formal properties of each solution, as well as its theoretical predictions in a number of games. I also explore each solution concept’s compatibility with orthodox game theory. I also discuss the limitations of the aforementioned goal-directed reasoning theories. I argue that each theory offers a compelling explanation of how a certain type of decision-maker identifies the mutually advantageous solutions of non-cooperative games, but neither of them offers a definitive answer to the question of how people coordinate their actions in non-cooperative social interactions. (shrink)

According to standard rational choice theory, as commonly used in political science and economics, an agent's fundamental preferences are exogenously fixed, and any preference change over decision options is due to Bayesian information learning. Although elegant and parsimonious, such a model fails to account for preference change driven by experiences or psychological changes distinct from information learning. We develop a model of non-informational preference change. Alternatives are modelled as points in some multidimensional space, only some of whose dimensions play a (...) role in shaping the agentís preferences. Any change in these "motivationally salient" dimensions can change the agent's preferences. How it does so is described by a new representation theorem. Our model not only captures a wide range of frequently observed phenomena, but also generalizes some standard representations of preferences in political science and economics. (shrink)