Heuristics are efficient cognitive processes that ignore information. In contrast to the widely held view that less processing reduces accuracy, the study of heuristics shows that less information, computation, and time can in fact improve accuracy. We review the major progress made so far: the discovery of less-is-more effects; the study of the ecological rationality of heuristics, which examines in which environments a given strategy succeeds or fails, and why; an advancement from vague labels to computational models of heuristics; the (...) development of a systematic theory of heuristics that identifies their building blocks and the evolved capacities they exploit, and views the cognitive system as relying on an “adaptive toolbox;” and the development of an empirical methodology that accounts for individual differences, conducts competitive tests, and has provided evidence for people’s adaptive use of heuristics. Homo heuristicus has a biased mind and ignores part of the available information, yet a biased mind can handle uncertainty more efficiently and robustly than an unbiased mind relying on more resource-intensive and general-purpose processing strategies. (shrink)

We introduce a family of rules for adjusting one's credences in response to learning the credences of others. These rules have a number of desirable features. 1. They yield the posterior credences that would result from updating by standard Bayesian conditionalization on one's peers' reported credences if one's likelihood function takes a particular simple form. 2. In the simplest form, they are symmetric among the agents in the group. 3. They map neatly onto the familiar Condorcet voting results. 4. They (...) preserve shared agreement about independence in a wide range of cases. 5. They commute with conditionalization and with multiple peer updates. Importantly, these rules have a surprising property that we call synergy - peer testimony of credences can provide mutually supporting evidence raising an individual's credence higher than any peer's initial prior report. At first, this may seem to be a strike against them. We argue, however, that synergy is actually a desirable feature and the failure of other updating rules to yield synergy is a strike against them. (shrink)

How can anyone be rational in a world where knowledge is limited, time is pressing, and deep thought is often an unattainable luxury? Traditional models of unbounded rationality and optimization in cognitive science, economics, and animal behavior have tended to view decision-makers as possessing supernatural powers of reason, limitless knowledge, and endless time. But understanding decisions in the real world requires a more psychologically plausible notion of bounded rationality. In Simple heuristics that make us smart (Gigerenzer et al. 1999), we (...) explore fast and frugal heuristics – simple rules in the mind's adaptive toolbox for making decisions with realistic mental resources. These heuristics can enable both living organisms and artificial systems to make smart choices quickly and with a minimum of information by exploiting the way that information is structured in particular environments. In this précis, we show how simple building blocks that control information search, stop search, and make decisions can be put together to form classes of heuristics, including: ignorance-based and one-reason decision making for choice, elimination models for categorization, and satisficing heuristics for sequential search. These simple heuristics perform comparably to more complex algorithms, particularly when generalizing to new data – that is, simplicity leads to robustness. We present evidence regarding when people use simple heuristics and describe the challenges to be addressed by this research program. Key Words: adaptive toolbox; bounded rationality; decision making; elimination models; environment structure; heuristics; ignorance-based reasoning; limited information search; robustness; satisficing; simplicity. (shrink)

Axiomatic rationality is defined in terms of conformity to abstract axioms. Savage limited axiomatic rationality to small worlds, that is, situations in which the exhaustive and mutually exclusive set of future states S and their consequences C are known. Others have interpreted axiomatic rationality as a categorical norm for how human beings should reason, arguing in addition that violations would lead to real costs such as money pumps. Yet a review of the literature shows little evidence that violations are actually (...) associated with any measurable costs. Limiting axiomatic rationality to small worlds, I propose a naturalized version of rationality for situations of intractability and uncertainty, all of which are not in. In these situations, humans can achieve their goals by relying on heuristics that may violate axiomatic rationality. The study of ecological rationality requires formal models of heuristics and an analysis of the structures of environments these can exploit. It lays the foundation of a moderate naturalism in epistemology, providing statements about heuristics we should use in a given situation. Unlike axiomatic rationality, ecological rationality can explain less-is-more effects, formalize when one should move from ‘is’ to ‘ought,’ and be evaluated by goals beyond coherence, such as predictive accuracy, frugality, and efficiency. Ecological rationality can be seen as a formalization of means–end instrumentalist rationality, based on Herbert Simon’s insight that rational behavior is a function of the mind and its environment. (shrink)

We introduce a ranking of multidimensional alternatives, including uncertain prospects as a particular case, when these objects can be given a matrix form. This ranking is separable in terms of rows and columns, and continuous and monotonic in the basic quantities. Owing to the theory of additive separability developed here, we derive very precise numerical representations over a large class of domains (i.e., typically notof the Cartesian product form). We apply these representationsto (1)streams of commodity baskets through time, (2)uncertain social (...) prospects, (3)uncertain individual prospects. Concerning(1), we propose a finite horizon variant of Koopmans’s (1960) axiomatization of infinite discounted utility sums. The main results concern(2). We push the classic comparison between the exanteand expostsocial welfare criteria one step further by avoiding any expected utility assumptions, and as a consequence obtain what appears to be the strongest existing form of Harsanyi’s (1955) Aggregation Theorem. Concerning(3), we derive a subjective probability for Anscombe and Aumann’s (1963) finite case by merely assuming that there are two epistemically independent sources of uncertainty. (shrink)

We investigate the conflict between the ex ante and ex post criteria of social welfare in a new framework of individual and social decisions, which distinguishes between two sources of uncertainty, here interpreted as an objective and a subjective source respectively. This framework makes it possible to endow the individuals and society not only with ex ante and ex post preferences, as is usually done, but also with interim preferences of two kinds, and correspondingly, to introduce interim forms of the (...) Pareto principle. After characterizing the ex ante and ex post criteria, we present a first solution to their conflict that extends the former as much possible in the direction of the latter. Then, we present a second solution, which goes in the opposite direction, and is also maximally assertive. Both solutions translate the assumed Pareto conditions into weighted additive utility representations, and both attribute to the individuals common probability values on the objective source of uncertainty, and different probability values on the subjective source. We discuss these solutions in terms of two conceptual arguments, i.e., the by now classic spurious unanimity argument and a novel informational argument labelled complementary ignorance. The paper complies with the standard economic methodology of basing probability and utility representations on preference axioms, but for the sake of completeness, also considers a construal of objective uncertainty based on the assumption of an exogeneously given probability measure. JEL classification: D70; D81. (shrink)

The rule to maximize expected utility is intended for decisions where options involve risk. In those decisions the decision maker's attitude toward risk is important, and the rule ought to take it into account. Allais's and Ellsberg's paradoxes, however, suggest that the rule ignores attitudes toward risk. This suggestion is supported by recent psychological studies of decisions. These studies present a great variety of cases where apparently rational people violate the rule because of aversion or attraction to risk. Here I (...) attempt to resolve the issue concerning expected utility and risk. I distinguish two versions of the rule to maximize expected utility. One adopts a broad interpretation of the consequences of an option and has great intuitive appeal. The other adopts a narrow interpretation of the consequences of an option and seems to have certain technical and practical advantages. I contend that the version of the rule that interprets consequences narrowly does indeed neglect attitudes toward risk. That version of the rule excludes the risk involved in an option from the consequences of the option and, contrary to what is usually claimed, cannot make up for this exclusion through adjustments in probability and utility assignments. I construct a new, general argument that establishes this in a rigorous way. On the other hand, I contend that the version of the rule that interprets consequences broadly takes account of attitudes toward risk by counting the risk involved in an option among the consequences of the option. I rebut some objections to this version of the rules, in particular, the objection that the rule lacks practical interest. Drawing upon the literature on 'mean-risk' decision rules, I show that this version of the rule can be used to solve some realistic decision problems. (shrink)

Policymakers who seek to make scientifically informed decisions are constantly confronted by scientific uncertainty and expert disagreement. This thesis asks: how can policymakers rationally respond to expert disagreement and scientific uncertainty? This is a work of non-ideal theory, which applies formal philosophical tools developed by ideal theorists to more realistic cases of policymaking under scientific uncertainty. I start with Bayesian approaches to expert testimony and the problem of expert disagreement, arguing that two popular approaches— supra-Bayesianism and the standard model of (...) expert deference—are insufficient. I develop a novel model of expert deference and show how it can deal with many of these problems raised for them. I then turn to opinion pooling, a popular method for dealing with disagreement. I show that various theoretical motivations for pooling functions are irrelevant to realistic policymaking cases. This leads to a cautious recommendation of linear pooling. However, I then show that any pooling method relies on value judgements, that are hidden in the selection of the scoring rule. My focus then narrows to a more specific case of scientific uncertainty: multiple models of the same system. I introduce a particular case study involving hurricane models developed to support insurance decision-making. I recapitulate my analysis of opinion pooling in the context of model ensembles, confirming that my hesitations apply. This motivates a shift of perspective, to viewing the problem as a decision theoretic one. I rework a recently developed ambiguity theory, called the confidence approach, to take input from model ensembles. I show how it facilitates the resolution of the policymaker’s problem in a way that avoids the issues encountered in previous chapters. This concludes my main study of the problem of expert disagreement. In the final chapter, I turn to methodological reflection. I argue that philosophers who employ the mathematical methods of the prior chapters are modelling. Employing results from the philosophy of scientific models, I develop the theory of normative modelling. I argue that it has important methodological conclusions for the practice of formal epistemology, ruling out popular moves such as searching for counterexamples. (shrink)

We sometimes seem to face fundamental moral uncertainty, i.e., uncertainty about what is morally good or morally right that cannot be reduced to ordinary descriptive uncertainty. This phenomenon raises a puzzle for noncognitivism, according to which moral judgments are desire-like attitudes as opposed to belief-like attitudes. Can a state of moral uncertainty really be a noncognitive state? So far, noncognitivists have not been able to offer a completely satisfactory account. Here, we argue that noncognitivists should exploit the formal analogy between (...) moral uncertainty and moral multi-objective decision problems. Our ‘multi-objective story’ enables noncognitivists to save our moral uncertainty thought and talk by explaining how the underlying phenomenon could be noncognitive. (shrink)

When an agent learns of an expert's credence in a proposition about which they are an expert, the agent should defer to the expert and adopt that credence as their own. This is a popular thought about how agents ought to respond to (ideal) experts. In a Bayesian framework, it is often modelled by endowing the agent with a set of priors that achieves this result. But this model faces a number of challenges, especially when applied to non-ideal agents (who (...) nevertheless interact with ideal experts). I outline these problems, and use them as desiderata for the development of a new model. Taking inspiration from Richard Jeffrey's development of Jeffrey conditioning, I develop a model in which expert reports are taken as exogenous constraints on the agent's posterior probabilities. I show how this model can handle a much wider class of expert reports (for example reports of conditional probabilities), and can be naturally extended to cover propositions for which the agent has no prior. (shrink)

In recent years, some epistemologists have argued that practical factors can make the difference between knowledge and mere true belief. While proponents of this pragmatic thesis have proposed necessary and sufficient conditions for knowledge, it is striking that they have failed to address Gettier cases. As a result, the proposed analyses of knowledge are either lacking explanatory power or susceptible to counterexamples. Gettier cases are also worth reflecting on because they raise foundational questions for the pragmatist. Underlying these challenges is (...) the fact that pragmatic epistemologies not only rely upon normative theories of rational choice but also require externalist standards to rule out epistemic luck. Unfortunately, we lack adequate externalist theories of rational choice. In response, I address these foundational challenges by offering the outlines of an externalist decision theory. While this task is an ambitious one that I cannot hope to complete, I survey the outlines of a decision-theoretic framework on which a richer pragmatic epistemology can be developed. My hope is that this framework opens up new avenues of exploration for the pragmatic epistemologist. (shrink)

This paper evaluates the current use of the Principal Agent Model (PAM) in accounting and finance, focusing on the agent'ss use of private information. The agent'ss behavioral norms in the the PAM deviate from commonly held ethical values in society, from models of man in conventional economic theory, and also from behavioral foundations of related business school fields like corporate strategy, business ethics, and human resource management. Still, it would be unwise to reject the PAM solely because of its distasteful (...) ethical assumptions. The model does appear to have predictive power, but its descriptive or normative qualities remain unexplored. The popularity of the PAM, with its extreme model of man, raises fundamental questions about the impact of this model on business school stakeholders and society at large. (shrink)

Ethical banking, microfinance institutions or certain credit cooperatives, among others, grant socially responsible loans. This paper presents a credit score system for them. The model evaluates social and financial aspects of the borrower. The financial aspects are evaluated under the conventional banking framework, by analysing accounting statements and financial projections. The social aspects try to quantify the loan impact on the achievement of Millennium Development Goals such as employment, education, environment, health or community impact. The social credit score model should (...) incorporate the lender’s know-how and should also be coherent with its mission. This is done using Multi-Criteria Decision Making. The paper illustrates a real case: a loan application by a social entrepreneur presented to a socially responsible lender. The decision support system not only produces a score, but also reveals strengths and weaknesses of the application. (shrink)

Nearly all students believe academic cheating is wrong, yet few students say they would report witnessed acts of cheating. To explain this apparent tension, the present research examined college students’ reasoning about whether to report plagiarism or other forms of cheating. Study 1 examined students’ conflicts when deciding whether to report cheating. Most students gave reasons against reporting a peer (e.g., social and physical consequences, a lack of responsibility to report) as well as reasons in favor of reporting (e.g., concerns (...) about welfare, justice, and fairness). Study 2 provided experimental confirmation that the contextual factors referenced by Study 1 participants in fact influenced decisions about whether to report cheating. Overall, the findings indicate that students often decide against reporting peers’ acts of cheating, though not due to a lack of concern about integrity. Rather, students may refrain from reporting because of conflicting concerns, lack of information about school policy, and perceived better alternatives to reporting. (shrink)

Many philosophers hold that for various reasons there must be psychological laws governing beliefs and desires. One of the few serious examples that they offer is the _belief-desire law_, which states, roughly, that _ceteris paribus_ people do what they believe will satisfy their desires. This paper argues that, in fact, there is no such law. In particular, decision theory does not support the contention that there is such a law.

The ethical matrix is a participatory tool designed to structure ethical reflection about the design, the introduction, the development or the use of technologies. Its collective implementation, in the context of participatory decision-making, has shown its potential usefulness. On the contrary, its implementation by a single researcher has not been thoroughly analyzed. The aim of this paper is precisely to assess the strength of ethical matrixes implemented by a single researcher as a tool for conceptual normative analysis related to technological (...) choices. Therefore, the ethical matrix framework is applied to the management of high-level radioactive waste, more specifically to retrievable and non-retrievable geological disposal. The results of this analysis show that the usefulness of ethical matrixes is twofold and that they provide a valuable input for further decision-making. Indeed, by using ethical matrixes, implicit ethically relevant issues were revealed—namely issues of equity associated with health impacts and differences between close and remote future generations regarding ethical impacts. Moreover, the ethical matrix framework was helpful in synthesizing and comparing systematically the ethical impacts of the technologies under scrutiny, and hence in highlighting the potential ethical conflicts. (shrink)

When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all (...) of one's beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible. (shrink)

How can it be rational to work on a new theory that does not yet meet the standards for good or acceptable theories? If diversity of approaches is a condition for scientific progress, how can a scientific community achieve such progress when each member does what it is rational to do, namely work on the best theory? These two methodological problems, the problem of pursuit and the problem of diversity, can be solved by taking into account the cognitive risk that (...) is involved in theory choice. I compare this solution to other proposals, in particular T. S. Kuhn's and P. Kitcher's view that the two problems demonstrate the epistemic significance of the scientific community. (shrink)

Per definition business sustainability demands the integration of environmental, social, and economic outcomes. Yet, managerial decision-making involving sustainability objectives is fraught with tension and the way managerial decision-makers frame sustainability issues in their mindset influences how sustainability tensions are managed at the organisational level. In the bid to better understand what types of managerial mindsets, or cognitive frames, foster integrative business sustainability practices that simultaneously advance environmental, social, and economic objectives, extant research has focussed on the underlying logics that drive (...) the acknowledgement of sustainability tensions. However, the existing logics-based constructs do not sufficiently explain this link, and it has been suggested that managers perceive and manage sustainability tensions based on the values that they hold. To clarify the roles of managerial values and logics as antecedents in business sustainability decision-making, we integrate Keeney’s value-focussed thinking approach with managerial and organisational cognition perspectives. Drawing on data from a survey with 169 senior procurement managers in Australia we found three types of cognitive frames which demonstrate that stronger sustainability values are associated with a more holistic perception of sustainability tensions and vice versa. We also found that managers’ cognitive framing of sustainability is strengthened by more holistic organisational cognitive frames and discuss according implications for managerial decision-making in theory and practice. (shrink)

This article starts with an overview of the author’s personal involvement—as an Operations Research consultant—in several engineering case-studies that may raise ethical questions; e.g., case-studies on nuclear waste, water management, sustainable ecology, military tactics, and animal welfare. All these case studies employ computer simulation models. In general, models are meant to solve practical problems, which may have ethical implications for the various stakeholders; namely, the modelers, the clients, and the public at large. The article further presents an overview of codes (...) of ethics in a variety of disciples. It discusses the role of mathematical models, focusing on the validation of these models’ assumptions. Documentation of these model assumptions needs special attention. Some ethical norms and values may be quantified through the model’s multiple performance measures, which might be optimized. The uncertainty about the validity of the model leads to risk or uncertainty analysis and to a search for robust models. Ethical questions may be pressing in military models, including war games. However, computer games and the related experimental economics may also provide a special tool to study ethical issues. Finally, the article briefly discusses whistleblowing. Its many references to publications and websites enable further study of ethical issues in modeling. (shrink)

According to the mixed lexicographic/additive account of ‘better than’ and similar aggregative value comparatives like ‘healthier than’, values are multidimensional and different aspects of a value are aggregated into an overall assessment in a lexicographic way, based on an ordering of value aspects. It is argued that this theory can account for an acceptable definition of Chang’s notion of parity and that it also offers a solution to Temkin’s and Rachels’s Spectrum Cases without giving up the transitivity of overall betterness. (...) Formal details and proofs are provided in an “Appendix”. (shrink)

Aristotle's doctrine of the mean is expressed in quantitative terms, but this has been hard for some people to take literally, its more elaborate versions sometimes being described as “extremely silly.” Roughly two books of the Nicomachean Ethics are permeated with talk of character traits which are either deficient or excessive, however, and the aim of this paper is to examine how the doctrine might meet the objections of its critics.

The options that people face are rarely ideal: they are good in some ways and poor in others. People have problems choosing among such options because they don’t know which ends to favor. Multiple objectives pose a problem not only for decision makers, but also for our account of decision making. People act to achieve their ends given their beliefs. In order to handle decisions with multiple objectives, however, this story must be supplemented by an account of which ends are (...) implicated in which decisions (e.g., do individual goals guide particular choices? do different ends jointly pick out courses of action?). Unfortunately, such an account is lacking. As a result, there is a gap (at least) in our most basic account of human behavior. In this paper I explore that gap and examine some proposals for closing it. (shrink)

Elicitation methods in decision-making under risk allow us to infer the utilities of outcomes as well as the probability weights from the observed preferences of an individual. An optimally efficient elicitation method is proposed, which takes the inevitable distortion of preferences by random errors into account and minimizes the effect of such errors on the inferred utility and probability weighting functions. Under mild assumptions, the optimally efficient method for eliciting utilities and probability weights is the following three-stage procedure. First, a (...) probability is elicited whose subjective weight is one half. Second, the utility function is elicited through the midpoint chaining certainty equivalent method using the probability elicited at the first stage. Finally, the probability weighting function is elicited through the probability equivalent method. (shrink)

One resolution of the St. Petersburg paradox recognizes that a gamble carries a risk sensitive to the gamble's stakes. If aversion to risk increases sufficiently fast as stakes go up, the St. Petersburg gamble has a finite utility.

We propose a descriptive version of the classical multi-attribute utility model; to that end, we add a new parameter, momentary salience, to the customary formulation. The addition of this parameter allows the theory to accommodate changes in the decision maker’s mood and circumstances, as the saliencies of anticipated consequences are driven by concerns of the moment. By allowing for the number of consequences given attention at the moment of decision to vary, the new model mutes the criticism that SEU models (...) call for an omniscient decision maker. Use of the model is illustrated with a large-scale longitudinal study showing that adolescent smokers have higher utility for smoking than nonsmokers. We also propose to use the model hierarchically to describe everyday decisions that people deal with repeatedly. Big decisions, which set policy, guide a host of nested little decisions, which in turn lead to action. For a little decision, one of the options will be consistent with the policy, and will inherit its high utility. Accordingly, most little decisions will be made quickly and will follow the policy. However, people do sometimes decide to violate their own policies, and we describe how these lapses can lead to collapse of the policy. (shrink)

This paper argues the thesis that a particular style of reasoning, qualitative comparative reasoning (QCR), plays a role in at least three areas of legal reasoning that are central in AI and law research, namely legal theory construction, case-based reasoning in the form of case comparison, and legal proof. The paper gives an informal exposition of one particular way to deal with QCR, based on the author’s previous work on reason-based logic (RBL). Then it contains a substantially adapted formalisation of (...) RBL, to make RBL suitable for dealing with QCR. The paper concludes with a brief discussion of related work. (shrink)

Ruth Chang and Joseph Raz have both drawn far-reaching consequences for agency from the phenomenon of incommensurability. After criticizing their arguments, I outline an alternative view: if incommensurability is vagueness, then there are no substantial implications for agency, except perhaps a limited form of naturalistic voluntarism if our reasons are provided by desires.

Bipolar argument graphs represent the structure of complex pro and contra arguments for one or more standpoints. In this article, ampliative and exclusionary principles of evaluating argument strength in bipolar acyclic argumentation graphs are laid out and compared to each other. Argument chains, linked arguments, link attackers and supporters, and convergent arguments are discussed. The strength of conductive arguments is also addressed but it is argued that more work on this type of argument is needed to properly distinguish argument strength (...) from more general value-based components of such arguments. The overall conclusion of the article is that there is no justifiably unique solution to the problem of argument strength outside of a particular epistemological framework. (shrink)

This paper discusses Jean-Yves Jaffray’s ideas on ambiguity and the views underlying his ideas. His models, developed 20 years ago, provide the most tractable separation of risk attitudes, ambiguity attitudes, and ambiguity beliefs available in the literature today.

This paper deals with the equilibria of games when the agents have multiple objectives and, therefore, their utilities cannot be represented by a single value, but by a vector containing the various dimensions of the utility. Our approach allows the incorporation of partial information about the preferences of the agents into the model, and permits the identification of the set of equilibria in accordance with this information. We also propose an additional conservative criterion which can be applied in this framework (...) in order to predict the results of interaction. The potential application of the theoretical results is shown with an analysis of a mixed oligopoly in which the agents value additional objectives other than their own benefit. These objectives are related to social welfare and to the profit of the industry. The flexibility of our approach provides a general theoretical framework for the analysis of a wide range of strategic economic models. (shrink)

The standard Bayesian recipe for selecting the rational choice is presented. A familiar example in which the recipe fails to produce any definite result is introduced. It is argued that a generalization of Gärdenfors’ and Sahlin’s theory of unreliable probabilities — which itself does not guarantee a solution to the problem — offers the best available approach. But a number of challenges to this approach are also presented and discussed.

This paper formulates and axiomatizes utility models for denumerable time streams that make no commitment in regard to discounting future outcomes. The models address decision under certainty and decision under risk. Independence assumptions in both contexts lead to additive or multiplicative utilities over time periods that allow unambiguous comparisons of the relative importance of different periods. The models accommodate all patterns of future valuation. This discount-neutral feature is attained by restricting preference comparisons to outcome streams or probability distributions on outcome (...) streams that differ in at most a finite number of periods. (shrink)

This paper presents the idea of a decision-support system for a livestock farm, called “ethical accounting”, to be used as an extension of traditional cost accounting. “Ethical accounting” seeks to make available to the farmer information about how his decisions affect the interests of farm animals, consumers and future generations. Furthermore, “ethical accounting” involves value-based planning. Thus, the farmer should base his choice of production plan on reflections as to his fundamental objectives, and he should make his final decision only (...) after having seriously considered the various consequences for the affected parties. (shrink)

Being a formal and general as well as the most widely accepted approach to practical rationality, rational decision theory should be crucial for justifying rational morals. In particular, acting morally should also be rational in decision theoretic terms. After defending this thesis, in the critical part of the paper two strategies to develop morals following this insight are criticized: game theoretical ethics of cooperation and ethical intuitionism. The central structural objections to ethics of cooperation are that they too directly aim (...) at the rationality of moral action and that they to do not encompass moral values or a moral desirability function. The constructive half of the paper takes up these criticisms by developing a two-part strategy to bring rationality and morals in line. The first part is to define ‘moral desirability’. This is done, using multi-attribute utility theory, by equating several adequate components of an individual’s comprehensive utility function with the moral desirability function. The second part is to introduce mechanisms, institutions, in particular socially valid moral norms, that provide further motivation for acting in accordance with morals. (shrink)

We present a method to characterize the preferences of a decision maker in decisions with multiple attributes. The approach modifies the outcomes of a multivariate lottery with a multivariate transformation and observes the change in the decision maker’s certain equivalent. If the certain equivalent follows this multivariate transformation, we refer to this situation as multiattribute transformation invariance, and we derive the functional form of the utility function. We then show that any additive or multiplicative utility function that is formed of (...) continuous and strictly monotonic utility functions of the individual attributes must satisfy transformation invariance with a multivariate transformation. This result provides a new interpretation for multiattribute utility functions with mutual utility independence as well as a necessary and sufficient condition that must be satisfied when assuming these widely used functional forms. We work through several examples to illustrate the approach. (shrink)