We conduct a standardized survey on risk preferences in 53 countries worldwide and estimate cumulative prospect theory parameters from the data. The parameter estimates show that significant differences on the cross-country level are to some extent robust and related to economic and cultural differences. In particular, a closer look on probability weighting underlines gender differences, economic effects, and cultural impact on probability weighting. The data set is a useful starting point for future research that investigates the impact of risk preferences (...) on the market level. (shrink)

Social accounting focuses on value transactions between organizations and their stakeholders; both market ones, where the value perceived by the different stakeholders is identified, and non-markets ones, where transactions are monetized at their fair value. There was long awareness of an emotional value translation, linked to the transfer of different products, services, remunerations, and incentives, regardless of whether they were market or non-market. Yet that emotional value seemed to be anchored in the field of psychology and managed to elude economic (...) science. This study seeks to identify emotional value with consumer surplus and, by extension, of the other stakeholders in a value transfer process. This proposal allows the emotional value to be anchored in the micro-economy and allows it to be objectively calculated using a regression involving three elements: the market price, the fair value interval, and a perceived satisfaction score by the different stakeholders in the form of significant sampling. The result obtained not only allows Social Accounting to be complemented with emotional value, but it also facilitates its incorporation in the strategy to optimize the emotional value. Furthermore, it enables a quantification of the perceived subjective utility, which opens up a research path where some possible lines are clearly identified. (shrink)

Lewis proved a Dutch book theorem for Conditionalization. The theorem shows that an agent who follows any credal update rule other than Conditionalization is vulnerable to bets that inflict a sure loss. Lewis’s theorem is tailored to factive formulations of Conditionalization, i.e. formulations on which the conditioning proposition is true. Yet many scientific and philosophical applications of Bayesian decision theory require a non-factive formulation, i.e. a formulation on which the conditioning proposition may be false. I prove a Dutch book theorem (...) tailored to non-factive Conditionalization. I also discuss the theorem’s significance. (shrink)

We analyze the effects of uncertainty on WTA, WTP and the WTA–WTP gap. Extending the approach of Weber (Econom Lett 80:311–315, 2003) to the case of lotteries, we develop an exact expression for the WTA–WTP gap that allows identification of its magnitude under different utility specifications. Reinterpreting and extending results by Gabillon(Econom Lett 116:157–160, 2012), we also identify generally the relationship between an agent’s utility of income and the gap’s algebraic sign, as well as the effects of risk increases on (...) WTA and WTP. Finally, we derive the limit behavior of the gap as income or risk increase. (shrink)

With concerns regarding climate change rising, companies and policy makers seek to understand the precursors to environmentally-friendly consumer choice. Decision modes are the qualitatively different psychological processes employed to arrive at decisions. Across six studies, the present project establishes (a) which decision modes are employed by consumers to decide between electricity plans that differ in environmental impact, and (b) how employed decision modes affect those choices. We demonstrate that consumers are most likely to use Calculation Modes when facing such choices. (...) Importantly, we find that Affect or Role Modes promote more environmentally-friendly choices, while Calculation Modes decrease environmentally-friendly choices. Experimentally promoting use of a Role Mode over a Calculation Mode increases selection of environmentally-friendly alternatives, and the relative degree of employing the Role Mode mediates this effect. Our findings provide insight into how decision mode usage can alter environmental decisions, and suggest mechanisms and tools for marketers and policy makers to influence consumer choice. (shrink)

The understanding of decision-making systems has come together in recent years to form a unified theory of decision-making in the mammalian brain as arising from multiple, interacting systems (a planning system, a habit system, and a situation-recognition system). This unified decision-making system has multiple potential access points through which it can be driven to make maladaptive choices, particularly choices that entail seeking of certain drugs or behaviors. We identify 10 key vulnerabilities in the system: (1) moving away from homeostasis, (2) (...) changing allostatic set points, (3) euphorigenic signals, (4) overvaluation in the planning system, (5) incorrect search of situation-action-outcome relationships, (6) misclassification of situations, (7) overvaluation in the habit system, (8) a mismatch in the balance of the two decision systems, (9) over-fast discounting processes, and (10) changed learning rates. These vulnerabilities provide a taxonomy of potential problems with decision-making systems. Although each vulnerability can drive an agent to return to the addictive choice, each vulnerability also implies a characteristic symptomology. Different drugs, different behaviors, and different individuals are likely to access different vulnerabilities. This has implications for an individual's susceptibility to addiction and the transition to addiction, for the potential for relapse, and for the potential for treatment. (shrink)

The relevance to decision research of recent advances in the philosophy of social science is considered. The critical realism of Roy Bhaskar argues for the identification of contextually contingent explanatory mechanisms at multiple levels based on concepts grounded in intersubjectively shared reality. Using examples from the author’s and other’s research on the psychology of decisions involving risk and uncertainty, this paper explores the implications of taking a critical realist approach. It is argued that critical realism has the potential to advance (...) and unify disparate experimental and naturalistic lines of research. Furthermore, a diverse range of experimental, process-tracing and observational methods can play important complementary roles in developing fruitful critical realist explanations of decisions involving risk and uncertainty. (shrink)

ABSTRACT Researchers have increasingly acknowledged that affect plays a role in ethical decision making. However, the impact that specific affective states may have on the expression of decision biases in the context of ethical dilemmas has received limited empirical attention. To address this, the present effort examined the impact of happy and sad affective states on biases in ethical decision making. In an online experiment, undergraduate students read short stories that either induced happy, sad, or relaxed affective states, followed by (...) a covert measure of three types of biases held to inhibit ethical decision making. Results demonstrated that happy affective states increased the expression of regulation biases, and sad affective states increased the expression of simplification biases, compared to relaxed affective states. Implications are discussed for advancing research on ethical decision making and reducing unethical behavior in organizations. (shrink)

Dual-processes theories of cognition implicitly assume universality of the human mind. However, research has shown that large-scale differences exist in thinking styles across cultures. Thereby, the universality of the effects found in Western samples remains an open empirical question. Here, we explored whether effects predicted by prospect theory, such as the framing effect, would be observed in a sample of 312 Bulgarian students. Overall, the size of the framing effect was smaller than in the original studies. Most notably, we failed (...) to reproduce the framing effect in the famous Asian Disease problem, using a rating response format. In a between-subjects design, decision- making performance was completely independent of university admission grades. We propose that studying the size of the effects across cultures is needed in order to establish the effects’ level of universality. More broadly, we suggest ways in which knowledge of cultural settings can help elaborate or test dual-process predictions. (shrink)

Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under uncertainty. The development of generalized expected utility models raised the question of whether such models could be used in the analysis of applied problems such as those involving production under uncertainty. Finally, the revival of the state-contingent approach led to the recognition of a fundamental duality between choice problems and production problems.

The American and some other constitutions entrench property rights by requiring super majoritarian voting as a condition for amending or revoking their own provisions. Following Buchanan and Tullock [The Calculus of Consent, Logical Foundations of Constitutional Democracy (University of Michigan Press, Ann Arbor), 1962], this paper analyzes individuals' interests behind a veil of ignorance, and shows that under some standard assumptions, a (simple) majoritarian rule should be adopted. This result changes if one assumes that preferences are consistent with the behavioral (...) phenomenon known as the endowment effect. It then follows that (at least some) property rights are best defended by super majoritarian protection. The paper then shows that its theoretical results are consistent with a number of doctrines underlying American Constitutional Law. (shrink)

Classical (Bayesian) probability (CP) theory has led to an influential research tradition for modeling cognitive processes. Cognitive scientists have been trained to work with CP principles for so long that it is hard even to imagine alternative ways to formalize probabilities. However, in physics, quantum probability (QP) theory has been the dominant probabilistic approach for nearly 100 years. Could QP theory provide us with any advantages in cognitive modeling as well? Note first that both CP and QP theory share the (...) fundamental assumption that it is possible to model cognition on the basis of formal, probabilistic principles. But why consider a QP approach? The answers are that (1) there are many well-established empirical findings (e.g., from the influential Tversky, Kahneman research tradition) that are hard to reconcile with CP principles; and (2) these same findings have natural and straightforward explanations with quantum principles. In QP theory, probabilistic assessment is often strongly context- and order-dependent, individual states can be superposition states (that are impossible to associate with specific values), and composite systems can be entangled (they cannot be decomposed into their subsystems). All these characteristics appear perplexing from a classical perspective. However, our thesis is that they provide a more accurate and powerful account of certain cognitive processes. We first introduce QP theory and illustrate its application with psychological examples. We then review empirical findings that motivate the use of quantum theory in cognitive theory, but also discuss ways in which QP and CP theories converge. Finally, we consider the implications of a QP theory approach to cognition for human rationality. (shrink)

Gigerenzer’s ‘external validity argument’ plays a pivotal role in his critique of the heuristics and biases research program (HB). The basic idea is that (a) the experimental contexts deployed by HB are not representative of the real environment and that (b) the differences between the setting and the real environment are causally relevant, because they result in different performances by the subjects. However, by considering Gigerenzer’s work on frequencies in probability judgments, this essay attempts to show that there are fatal (...) flaws in the argument. Specifically, each of the claims is controversial: whereas (b) is not adequately empirically justified, (a) is inconsistent with the ‘debiasing’ program of Gigerenzer’s ABC group. Therefore, whatever reason we might have for believing that the experimental findings of HB lack experimental validity, this should not be based on Gigerenzer’s version of the argument. (shrink)

Adaptive rationality theorists question the manner in which psychologists have typically assessed rational behavior and cognition. According to them, human rationality is adaptive, and the biases reported in the psychological literature are best seen as the result of using normative standards that are too narrow. As it turns out, their challenge is also quite controversial, and several aspects of it have been called into question. Yet, whilst it is often suggested that the lack of cogency comes about due to the (...) implausibility of the alternative normative framework, in this paper I articulate a different strategy to resist the revolutionary rhetoric of AR. As I argue here, even if we accept the normative framework of AR, the challenge from AR is less damaging than usually accepted. In particular, I challenge the claim that biases reported in the literature should be conceived of as violations of axiomatic rationality. I argue that the category of bias refers instead to a range of heterogeneous phenomena and that, since several important families of biases are not just violations of axiomatic rationality, these are not vulnerable to the AR challenge. In fact, I also show that the families I consider here look like plausible cases of irrational behavior from the perspective of AR, and that the outcome of my analysis does not sit well with AR theorists’ claim that people are generally successful at achieving prudential and epistemic goals. (shrink)

November 2009’s announcement of the USPSTF’s recommendations for screening for breast cancer raised a firestorm of objections. Chief among them were that the panel had insufficiently valued patients’ lives or allowed cost considerations to influence recommendations. The publicity about the recommendations, however, often either simplified the actual content of the recommendations or bypassed significant methodological issues, which a philosophical examination of both the science behind screening recommendations and their import reveals. In this article, I discuss two of the leading ethical (...) considerations at issue in screening recommendations: respect for patient autonomy and beneficence and then turn to the most significant methodological issues raised by cancer screening: the potential biases that may infect a trial of screening effectiveness, the problem of base rates in communicating risk, and the trade-offs involved in a judgment of screening effectiveness. These issues reach more broadly, into the use of “evidence-based” medicine generally, and have important implications for informed consent. (shrink)

Two components of lay observers’ calculus of moral judgment are proximal intent (the actor’s mind is focused on performing the action) and distal intent (the actor’s mind is focused on the broader goal). What causes observers to prioritize one form of intent over the other? The authors observed whether construal level (Studies 1-2) and beliefs about free will (Studies 3-4) would influence participants’ sensitivity to the actor’s proximal versus distal intent. In four studies, participants read scenarios in which the actor’s (...) proximal and distal intent were independently manipulated. In Study 1, when only distal intent was present in the actor’s mind, participants rated the psychologically distant actor more responsible than the psychologically near actor. In Study 2, when only distal intent was in the actor’s mind, participants with a chronic high level of action identification rated the actor more responsible than did those with a low level of action identification. In both studies, when only proximal intent was in the actor’s mind, construal level did not predict judgments of responsibility. In Study 3, when only proximal intent was present in the actor’s mind, the more participants believed in free will, the more they rated the actor responsible. When only distal intent was in the actor’s mind, free will belief did not influence ratings of responsibility. In Study 4, the same pattern emerged when free will / determinism beliefs were manipulated and the actor performed a positive (life-saving) act. The authors discuss how these results shed new light on the literatures on moral reasoning and psycho-legal theory. (shrink)

The standard expected utility model of tax evasion predicts that evasion is decreasing in the marginal tax rate. Recent literature shows cases in which incorporating prospect theory does and does not overturn the Puzzle. In a general environment that nests both PT and EUT preferences, we provide a detailed study of how the elements of PT affect the Puzzle. PT does not always reverse the Puzzle, hence we give and interpret conditions for when it does and does not. When allowing (...) for stigma and/or variable audit probability, PT reverses the Puzzle in the same way and with the same limitations as does EUT, if equally augmented. (shrink)

A number of behavioral economic insights suggest we will tend to overreact, individually and collectively, to a new, serious, but low probability health threat, like Covid 19. To respond more effectively to such threats, we should recognize why we will tend to overreact and prepare in advance not to do so. We also should recognize the usefulness in giving lower level governments, non-profits, and less formal communities some ability to respond, rather than presuming we should address a significant threat like (...) Covid using the highest level of government. (shrink)

Affective forecasting refers to the ability to predict future emotions, a skill that is essential to making decisions on a daily basis. Studies of the concept have determined that individuals are often inaccurate in making such affective forecasts. However, the mechanisms of these errors are not yet clear. In order to better understand why affective forecasting errors occur, this article seeks to trace the theoretical roots of this theory with a focus on its multidisciplinary history. The roots of affective forecasting (...) lie mainly in economics, with early claims positing that utility played a role in decision-making. Furthermore, the philosopher Jeremy Bentham’s descriptions of utilitarianism played a major role in our understanding of whether to define utility as a hedonic quality. The birth of behavioural economics resulted in a paradigm shift, introducing the concept of cognitive biases as influences on the accuracy of predicted utility. Daniel Gilbert and Timothy Wilson, the earliest researchers of affective forecasting errors, have proceeded with the concept of the accuracy of predicted affective utility to conduct experiments that seek to determine why our predictions of future affect are inaccurate and how such errors play a role in our decision-making. (shrink)

We extend the deceptive advertising model of Piccolo et al. :611–624, 2015) to a framework in which consumers may be loss averse. There are two sellers, competing on prices and offering experience goods with some differences in quality. Prospective customers may be harmed by deceptive advertising: a marketing practice that can induce them to make bad purchases. We show that although deceptive advertising occurs depending on the degree of consumers’ loss aversion, this behavioral bias does not reflect on firms’ prices. (...) Nevertheless, the presence of loss-averse consumers crucially changes the optimal deterrence rule that a Public Authority should adopt against false claims and misleading advertising. Unlike Piccolo et al., in this more general model, strong enforcements may improve the buyer welfare according to the degree of loss aversion. (shrink)

The aim of this paper is to present the ontic approach to the normativity of cognitive functions and mechanisms, which is directly related to the understanding of biological normativity in terms of normative mechanisms. This approach assumes the hypothesis that cognitive processes contain a certain normative component independent of external attributions and researchers’ beliefs. This component consists of specific cognitive mechanisms, which I call normative. I argue that a mechanism is normative when it constitutes given actions or behaviors of a (...) system. More precisely, it means that, on the one hand, it is their constitutive cause, and on the other hand, it determines a certain field of possibilities from which the system, guided by its own goals, preferences, environmental constraints, etc., chooses the appropriate action or behavior according to a given situation. The background for the analyses presented here is the predictive processing framework, in which it can be shown that at least some of the predictive mechanisms are in fact normative mechanisms. I refer here to the existence of a motivational relation which determines the normative dependence of the agent’s actions due to specific predictions and environmental constraints. (shrink)

Davidsonian analyses of action reports like ‘Alvin chased Theodore around a tree’ are often viewed as supporting the hypothesis that sentences of a human language H have truth conditions that can be specified by a Tarski-style theory of truth for H. But in my view, simple cases of adverbial modification add to the reasons for rejecting this hypothesis, even though Davidson rightly diagnosed many implications involving adverbs as cases of conjunct-reduction in the scope of an existential quantifier. I think the (...) puzzles in this vicinity reflect “framing effects,” which reveal the implausibility of certain assumptions about how linguistic meaning is related to truth and logical form. We need to replace these assumptions with alternatives, instead of positing implausible values of event-variables or implausible relativizations of truth to linguistic descriptions of actual events. (shrink)

Cumulative Prospect Theory (CPT) does not explain the St. Petersburg Paradox. We show that the solutions related to probability weighting proposed to solve this paradox, (Blavatskyy, Management Science 51:677–678, 2005; Rieger and Wang, Economic Theory 28:665–679, 2006) have to cope with limitations. In that framework, CPT fails to accommodate both gambling and insurance behavior. We suggest replacing the weighting functions generally proposed in the literature by another specification which respects the following properties: (1) to solve the paradox, the slope at (...) zero has to be finite. (2) to account for the fourfold pattern of risk attitudes, the probability weighting has to be strong enough. (shrink)

We call a decision maker risk averse for losses if that decision maker is risk averse with respect to lotteries having alternatives below a given reference alternative in their support. A two-person bargaining solution is called invariant under risk aversion for losses if the assigned outcome does not change after correcting for risk aversion for losses with this outcome as pair of reference levels, provided that the disagreement point only changes proportionally. We present an axiomatic characterization of the Nash bargaining (...) solution based on this condition, and we also provide a decision-theoretic characterization of the concept of risk aversion for losses. (shrink)

A transformative decision rule alters the representation of a decision problem, either by changing the set of alternative acts or the set of states of the world taken into consideration, or by modifying the probability or value assignments. A set of transformative decision rules is order-independent in case the order in which the rules are applied is irrelevant. The main result of this paper is an axiomatic characterization of order-independent transformative decision rules, based on a single axiom. It is shown (...) that the proposed axiomatization resolves a problem observed by Teddy Seidenfeld in a previous axiomatization by Peterson. (shrink)

This longitudinal study investigated the capability of various positive psychological resources to directly or indirectly protect specific well-being outcomes and moderate the effects on well-being of health and economic threats in a lockdown situation during the 2020 health crisis in France. At the beginning of lockdown, participants completed self-assessment questionnaires to document their initial level of well-being and state of nine different well-established psychological resources, measured as traits: optimism, hope, self-efficacy, gratitude toward the world, self-transcendence, wisdom, gratitude of being, peaceful (...) disengagement, and acceptance. Three weeks later, a weekly follow-up was started to record changes in well-being and reported threats for a duration of 5 weeks. Results show that psychological resources efficiently protected well-being in a variety of ways: they buffered the adverse effects of reported threats to health and wealth, increased the well-being averages, and reduced the decline in well-being over time. More specifically, emotional well-being was positively predicted by hope, gratitude of being, and, to a lesser level, by acceptance; psychological well-being by self-efficacy, personal wisdom, and gratitude of being; social well-being only by gratitude toward the world; and inner well-being by optimism, gratitude of being, and acceptance. The study emphasizes the importance of cultivating psychological resources in ordinary times to protect individuals' well-being when difficult and extraordinary circumstances occur. It also offers clues to the kind of resources one may want to develop. (shrink)

Iowa Gambling Task (IGT) is one of the most widely used tools to assess economic decision-making. However, the research tradition on aging and the Iowa Gambling Task (IGT) has been mainly focused on the overall performance of older adults in relation to younger or clinical groups, remaining unclear whether older adults are capable of learning along the task. We conducted a meta-analysis to examine older adults’ decision-making on the IGT, to test the effects of aging on reversal learning (45 studies) (...) and to provide normative data on total and block net scores (55 studies). From the accumulated empirical evidence, we found an average total net score of 7.55 (± 25.9). We also observed a significant reversal learning effect along the blocks of the IGT, indicating that older adults inhibit the prepotent response towards immediately attractive options associated with high losses, in favor of initially less attractive options associated with long-run profit. During block 1, decisions of older adults led to a negative gambling net score, reflecting the expected initial pattern of risk-taking. However, the shift towards more safe options occurred between block 2 (small-to-medium effect size) and blocks 3, 4, 5 (medium-to-large effect size). These main findings highlight that older adults are able to move from the initial uncertainty, when the possible outcomes are unknown, to decisions based on risk, when the outcomes are learned and may be used to guide future adaptive decision-making. (shrink)

Decision-making competence reflects individual differences in the susceptibility to decision-making errors, measured using tasks common from behavioral decision research (e.g., framing effects, under/overconfidence, following decision rules). Prior research demonstrates that those with higher decision-making competence report lower incidence of health-risking and antisocial behaviors, but there has been less focus on intermediate mechanisms that may impact real-world decisions, and, in particular, those implicated by normative models. Here we test the associations between measures of youth decision-making competence (Y-DMC) and one such mechanism, (...) the degree to which individuals make choices consistent with maximizing expected value (EV). Using a task involving hypothetical gambles, we find that greater EV sensitivity is associated with greater Y-DMC. Higher Y-DMC scores are associated with (a) choosing risky options when expected value favors those options and (b) avoiding risky options when expected value favors a certain option. This relationship is stronger for gambles that involved potential losses. The results suggest that Y-DMC captures decision processes consistent with standard normative evaluations of risky decisions. (shrink)

Experimental studies suggest that individuals exhibit more risk aversion in choices among prospects when the payment and resolution of uncertainty are immediate relative to when it is delayed. This leads to preference reversals that cannot be attributed to discounting. When data suggest that utility is time-independent, probability weighting functions, such as those used to model prospect theory preferences, can accommodate such reversals. We propose a simple descriptive model with a two-parameter probability weighting function where one of these parameters depends on (...) the time at which a prospect is resolved. The time-dependent parameter is responsible for the curvature of the probability weighting function and is regarded as an index of sensitivity towards changes in probabilities. We provide conditions that characterize increased sensitivity towards more distant probabilities; this can account for the observed relatively less risk aversion towards delayed prospects. In our framework, the discount function is unrestricted, such that the model is compatible with empirical findings of non-constant discounting. In a simple application to bargaining we illustrate when it is advantageous for an individual to advance or delay the bargaining resolution time if an opponent displays increased sensitivity towards probability changes with delay. (shrink)

When forecasting events, multiple types of uncertainty are often inherently present in the modeling process. Various uncertainty typologies exist, and each type of uncertainty has different implications a scientist might want to convey. In this work, we focus on one type of distinction betweendirect quantitative uncertaintyandindirect qualitative uncertainty. Direct quantitative uncertainty describes uncertainty about facts, numbers, and hypotheses that can be communicated in absolute quantitative forms such as probability distributions or confidence intervals. Indirect qualitative uncertainty describes the quality of knowledge (...) concerning how effectively facts, numbers, or hypotheses represent reality, such as evidence confidence scales proposed by the Intergovernmental Panel on Climate Change. A large body of research demonstrates that both experts and novices have difficulty reasoning with quantitative uncertainty, and visualizations of uncertainty can help with such traditionally challenging concepts. However, the question of if, and how, people may reason with multiple types of uncertainty associated with a forecast remains largely unexplored. In this series of studies, we seek to understand if individuals can integrate indirect uncertainty about how “good” a model is (operationalized as a qualitative expression of forecaster confidence) with quantified uncertainty in a prediction (operationalized as a quantile dotplot visualization of a predicted distribution). Our first study results suggest that participants utilize both direct quantitative uncertainty and indirect qualitative uncertainty when conveyed as quantile dotplots and forecaster confidence. In manipulations where forecasters were less sure about their prediction, participants made more conservative judgments. In our second study, we varied the amount of quantified uncertainty (in the form of the SD of the visualized distributions) to examine how participants’ decisions changed under different combinations of quantified uncertainty (variance) and qualitative uncertainty (low, medium, and high forecaster confidence). The second study results suggest that participants updated their judgments in the direction predicted by both qualitative confidence information (e.g., becoming more conservative when the forecaster confidence is low) and quantitative uncertainty (e.g., becoming more conservative when the variance is increased). Based on the findings from both experiments, we recommend that forecasters present qualitative expressions of model confidence whenever possible alongside quantified uncertainty. (shrink)

If neuroscience is to contribute to economics, it will do so by the way of psychology. Neural data can and do lead to better psychological theories, and psychological insights can and do lead to better economic models. Hence, neuroscience can in principle contribute to economics. Whether it actually will do so is an empirical question and the jury is still out. Economics currently faces theoretical and empirical challenges analogous to those faced by physics at the turn of the twentieth century (...) and ultimately addressed by quantum theory. If will emerge in the coming decades, it may well be founded on such concepts as cognitive processes and brain activity. (shrink)

Despite the conclusions from the contemporary philosophy of science, many economists cherish the ideal of positive science. Therefore, value-free economics is still the central paradigm in economics. The first aim of the paper is to investigate economics' axiomatic assumptions from an epistemological perspective. The critical analysis of the literature shows that the positive-normative dichotomy is exaggerated. Moreover, value-free economics is based on normative foundations that have a negative impact on individuals and society. The paper's second aim is to show that (...) economics' normativity is not a problem because the discussion concerning values is possible and unavoidable. In this context, Weber and other methodologists are investigated. The conclusion of the paper is that science can thrive without strict methodological rules thanks to institutional mechanisms. Therefore, economists could learn from artists who accept the world without absolute rules. This perspective opens the possibility for methodological pluralism and normative approaches. (shrink)

Should fear guide our actions and governments’ political decisions? A leitmotiv of common sense is that emotions are tricky, they blur our rational capacity of estimating utilities in order to plan action and thus they should be banned from any account of our rational expectations. In this paper I argue that an “heuristic of fear” is the appropriate attitude to adopt in order to cope with extreme risks. I thus defend the Precautionary Principle against the criticism put forward by Cass (...) Sunstein and other authors on the basis of a new analysis of extreme risks or “ruin-problems”. (shrink)

Environmental problems have an ethical dimension. They are not just about the efficient use of resources. Justice in the distribution of environmental goods and burdens, fairness in the processes of environmental decision-making, the moral claims of future generations and non-humans, these and other ethical values inform the responses of citizens to environmental problems. How can these concerns enter into good policy-making processes?Two expert-based approaches are commonly advocated for incorporating ethical values into environmental decision-making. One is an 'economic capture' approach, according (...) to which existing economic methods can be successfully extended to include ethical concerns. For example, stated preference methods, especially contingent valuation, have been developed to try and capture ethical responses as 'non-use values' of the environment, in particular 'existence values'. The other is a 'moral expert' approach which confines economic methods to the analysis of welfare gains, and assumes committees of ethical experts will complement economic expertise.Both approaches face problems in terms of addressing many widely held ethical values about the environment. Furthermore, both face problems concerning the democratic legitimacy of their procedures. How can policy-making be made responsive to different ethical values? What role is there for new deliberative and participatory methods? How far do existing decision-making institutions have the capacities to incorporate different modes of articulating environmental values?This policy brief examines the limitations of current attempts to capture ethical values within existing economic instruments and considers how these limitations might be overcome. Section 1 examines the assumptions that standard economic theory makes about individuals when they express values and make choices about the environment. The current models of agents that inform policy-making are seen to be ill-suited to incorporating the ethical responses of agents and this reveals some of the policy failures that may result. Section 2 shows how the physical and social properties of many environmental goods prevent their being treated as commodities. Section 3 considers the problems surrounding conceptions of fairness and legitimacy in processes for environmental valuation. Section 4 raises questions concerning the capacities of policy-making institutions to take cognisance of the results of different methods for articulating environmental values. (shrink)

Over recent years, a number of behavioural economic-informed policy frameworks have been developed, ranging from soft and hard forms of paternalism, to regulation against negative externalities, the so-called nudge, shove and budge approaches. This article considers these different frameworks as applied to some of the challenges posed by the social care needs of contemporary societies. It is argued that all of the frameworks are worthy of serious consideration in this policy domain, in that they offer food for thought on how (...) financial contributions to pay for social care might be increased, and how the quality of social care provision may be improved given available resources. (shrink)

While agreeing with the main conclusion of Dominic Wilkinson and colleagues (Wilkinson, Butcherine, and Savulescu 2019), namely, that there is no moral difference between treatment withholding and withdrawal as such, we wish to criticize their approach on the basis that it treats the widespread acceptance of withdrawal aversion (WA) as a cognitive bias. Wilkinson and colleagues understand WA as “a nonrational preference for withholding (WH) treatment over withdrawal (WD) of treatment” (22). They treat WA as a manifestation of loss aversion (...) and refer to Kahneman and colleagues (1991), which defined this effect as follows: “the disutility of giving up an object is greater that the utility associated with acquiring it” (194). In a previous work, Wilkinson and Savulescu understood nonequivalence between treatment withholding and withdrawal as a reflection of slightly different, although related, phenomena: status quo bias or omission bias (Wilkinson and Savulescu 2012, 130–131). In neither of these two papers do they describe precisely the relation between these well-known psychological effects and WA, nor do they explain why they treat these effects as examples of nonrational preferences, despite the fact that these issues have been the subject of wide-ranging discussions on the intersection of psychology, economy, and philosophy. (shrink)