One of the main contributions of Richard Bradley’s book is an elegant extension of Jeffrey’s Logic of Decision that countenances the evaluation of conditional prospects. This extension offers a promising new setting in which to model dynamic choice. In Bradley’s framework, plans can be understood as conditionals of an appropriate sort, while dynamic consistency can be viewed as providing a constraint on the evaluation of conditionals across time. In this paper, we study connections between planning conditionals and dynamic consistency.

We report the results of an experimental test of whether preaching the normative appeal of the sure-thing principle leads decision-makers to make choices that satisfy it. We use Allais-type decision problems to observe the incentive-compatible choices of 147 subjects, which either violate the sure-thing principle or adhere to it. Subjects are presented with normative arguments that support the counterfactual behaviour and then repeat their decisions. We observe violations of the sure-thing principle are robust to its normative justification. This result replicates (...) a famous small-sample observation using hypothetical tasks that was published by Paul Slovic and Amos Tversky almost half a century ago. We argue that this finding is as relevant now as it was then and that their design can be usefully applied to address contemporary issues in behavioural economics. (shrink)

This article draws on analysis of a variety of problems emerging from practical applications of Group Decision Support Systems (GDSS) to propose a fundamental evolution of decision support models from the traditional single decision-spine model to the decision-hedgehog. It positions decision making through the construction of narratives making the rhizome that constitutes the body of the hedgehog with the fundamental aim of enriching understanding of the contexts of decision making. Localized processes constructing and exploring prescriptions for action within a plethora (...) of decision spines are rooted in this rhizome. It identifies a synthesis of theories that influence decision making within organizations and proposes a comprehensive system of Group Decision Authoring and Communication Support (GDACS). In doing so it proposes that the iterative development of collective narrative within an organizing system engaged with complex decision making leads to active engagement with implementation - a process we call Collaborative Authoring of Outcomes. Throughout, the article outlines the implications for the organization of GDACS and proposes a comprehensive architecture that enables this approach. (shrink)

The justificatory force of empirical reasoning always depends upon the existence of some synthetic, a priori justification. The reasoner must begin with justified, substantive constraints on both the prior probability of the conclusion and certain conditional probabilities; otherwise, all possible degrees of belief in the conclusion are left open given the premises. Such constraints cannot in general be empirically justified, on pain of infinite regress. Nor does subjective Bayesianism offer a way out for the empiricist. Despite often-cited convergence theorems, subjective (...) Bayesians cannot hold that any empirical hypothesis is ever objectively justified in the relevant sense. Rationalism is thus the only alternative to an implausible skepticism. (shrink)

My title is intended to recall Terence Fine's excellent survey, Theories of Probability [1973]. I shall consider some developments that have occurred in the intervening years, and try to place some of the theories he discussed in what is now a slightly longer perspective. Completeness is not something one can reasonably hope to achieve in a journal article, and any selection is bound to reflect a view of what is salient. In a subject as prone to dispute as this, there (...) will inevitably be many who will disagree with any author's views, and I take the opportunity to apologize in advance to all such people for what they will see as the narrowness and distortion of mine. (shrink)

In his Truth and Probability (1926), Frank Ramsey provides foundations for measures of degrees of belief in propositions and preferences for worlds. Nonquantitative conditions on preferences for worlds, and gambles for worlds and certain near-worlds, are formulated which he says insure that a subject's preferences for worlds are represented by numbers, world values. Numbers, for his degrees of belief in propositions, probabilities, are then defined in terms of his world values. Ramsey does not also propose definitions of desirabilities for propositions, (...) though he is in a position to do this. Given his measures for probabilities of propositions and values of worlds, he can frame natural definitions for both evidential and causal desirabilities that would measure respectively the welcomeness of propositions as items of news, and as facts. His theory is neutral with respect to the evidential/causal division. In the present paper, as Ramsey's foundations are explained, several problems and limitations are noted. Their distinctive virtue – their evidential/causal neutrality – is demonstrated. Comparisons are made with other foundational schemes, and a perspective is recommended from which nonquantitative foundations are not the be all for quantitative theories of ideal preferences and credences. (shrink)

It is known that, on average, people adapt their choice of memory strategy to the subjective utility of interaction. What is not known is whether an individual's choices are boundedly optimal. Two experiments are reported that test the hypothesis that an individual's decisions about the distribution of remembering between internal and external resources are boundedly optimal where optimality is defined relative to experience, cognitive constraints, and reward. The theory makes predictions that are tested against data, not fitted to it. The (...) experiments use a no-choice/choice utility learning paradigm where the no-choice phase is used to elicit a profile of each participant's performance across the strategy space and the choice phase is used to test predicted choices within this space. They show that the majority of individuals select strategies that are boundedly optimal. Further, individual differences in what people choose to do are successfully predicted by the analysis. Two issues are discussed: the performance of the minority of participants who did not find boundedly optimal adaptations, and the possibility that individuals anticipate what, with practice, will become a bounded optimal strategy, rather than what is boundedly optimal during training. (shrink)

This article argues that not only are there serious internal difficulties with both Garber’s and later ‘Garber-style’ solutions of the old-evidence problem, including a recent proposal of Hartmann and Fitelson, but Garber-style approaches in general cannot solve the problem. It also follows the earlier lead of Rosenkrantz in pointing out that, despite the appearance to the contrary which inspired Garber’s nonclassical development of the Bayesian theory, there is a straightforward, classically Bayesian, solution.

Many people regard utility theory as the only rigorous foundation for subjective probability, and even de Finetti thought the betting approach supplemented by Dutch Book arguments only good as an approximation to a utility-theoretic account. I think that there are good reasons to doubt this judgment, and I propose an alternative, in which the probability axioms are consistency constraints on distributions of fair betting quotients. The idea itself is hardly new: it is in de Finetti and also Ramsey. What is (...) new is that it is shown that probabilistic consistency and consequence can be defined in a way formally analogous to the way these notions are defined in deductive (propositional) logic. The result is a free-standing logic which does not pretend to be a theory of rationality and is therefore immune to, among other charges, that of “logical omniscience”. (shrink)

This paper argues that Ramsey's view of the calculus of subjective probabilities as, in effect, logical axioms is the correct view, with powerful heuristic value. This heuristic value is seen particularly in the analysis of the role of conditionalization in the Bayesian theory, where a semantic criterion of synchronic coherence is employed as the test of soundness, which the traditional formulation of conditionalization fails. On the other hand, there is a generally sound rule which supports conditionalization in appropriate contexts, though (...) these contexts are not universal. This sound Bayesian rule is seen to be analogous in certain respects to the deductive rule of modus ponens. (shrink)

Many people believe that there is a Dutch Book argument establishing that the principle of countable additivity is a condition of coherence. De Finetti himself did not, but for reasons that are at first sight perplexing. I show that he rejected countable additivity, and hence the Dutch Book argument for it, because countable additivity conflicted with intuitive principles about the scope of authentic consistency constraints. These he often claimed were logical in nature, but he never attempted to relate this idea (...) to deductive logic and its own concept of consistency. This I do, showing that at one level the definitions of deductive and probabilistic consistency are identical, differing only in the nature of the constraints imposed. In the probabilistic case I believe that R.T. Cox's ‘scale-free’ axioms for subjective probability are the most suitable candidates. 1 Introduction 2 Coherence and Consistency 3 The Infinite Fair Lottery 4 The Puzzle Resolved—But Replaced by Another 5 Countable Additivity, Conglomerability and Dutch Books 6 The Probability Axioms and Cox's Theorem 7 Truth and Probability 8 Conclusion: ‘Logical Omniscience’ CiteULike Connotea Del.icio.us What's this? (shrink)

In this paper, I present a simple and straightforward logic of induction: a consequence relation characterized by a proof theory and a semantics. This system will be called LI. The premises will be restricted to, on the one hand, a set of empirical data and, on the other hand, a set of background generalizations. Among the consequences will be generalizations as well as singular statements, some of which may serve as predictions and explanations.

Should we act only for the sake of what we might bring about (causal decision theory); or is it enough for a decent motive that our action is highly correlated with something desirable (evidential decision theory)? The conflict between these points of view is embodied in Newcomb's problem. It is argued here that intuitive evidence from familiar decision contexts does not enable us to settle the issue, since the two theories dictate the same results in normal circumstances. Nevertheless, there are (...) several reasons to reject the causal approach: (1) its relative complexity; (2) its commitment to the existence of situations in which every possible act would be irrational; (3) its incorporation of an arbitrary time bias; and (4) its implicit distinction between what ought to be done and what ought to be hoped for. (shrink)

Common probability theories only allow the deduction of probabilities by using previously known or presupposed probabilities. They do not, however, allow the derivation of probabilities from observed data alone. The question thus arises as to how probabilities in the empirical sciences, especially in medicine, may be arrived at. Carnap hoped to be able to answer this question byhis theory of inductive probabilities. In the first four sections of the present paper the above mentioned problem is discussed in general. After a (...) short presentation of Carnap''s theory it is then shown that this theory cannot claim validity for arbitrary random processes. It is suggested that the theory be only applied to binomial and multinomial experiments. By application of de Finetti''s theorem Carnap''s inductive probabilities are interpreted as consecutive probabilities of the Bayesian kind. Through the introduction of a new axiom the decision parameter can be determined even if no a priori knowledge is given. Finally, it is demonstrated that the fundamental problem of Wald''s decision theory, i.e., the determination of a plausible criterion where no a priori knowledge is available, can be solved for the cases of binomial and multinomial experiments. (shrink)

This paper explores the consequences of applying two natural ideas from epistemology to decision theory: (1) that knowledge should guide our actions, and (2) that we know a lot of non-trivial things. In particular, we explore the consequences of these ideas as they are applied to standard decision theoretic puzzles such as the St. Petersburg Paradox. In doing so, we develop a “knowledge-first” decision theory and we will see how it can help us avoid fanaticism with regard to the St. (...) Petersburg puzzle and related puzzles. The result will be a decision theory that gives a novel, but well-motivated, reason for discounting small probabilities when making decisions. We examine the merits and demerits of such a decision theory. (shrink)

In this essay, my point of departure is Bernard Hodgson’s analysis of neo-classical economic theory and his demonstration that neo-classical economic thought is already a branch of normative theory. I undertake to broaden the demonstration by showing that other contemporary conceptions of economics are also irreducibly normative. The essay begins with an overview of Hodgson’s argument strategy, and a discussion of his thesis that economics is a moral science. This illustrates in what way moral presuppositions are at play as core (...) principles that both positivist and normativist economics take for granted. My strategy is to show that alternative conceptions of economics, in particular Schumpeterian accounts of evolution/innovation, and orthodox versions of ecological economics, share with classical and neo-classical economics normative assumptions about the common good, extending Hodgson’s thesis to one about moral science . For then these assumptions (both moral and scientific ) commit economics to unworkable notions of social and environmental optimization that ignore the pure historical contingency of physical, economic, social and cultural conditions. It is concluded that the relationship between facts and values must be fundamentally retheorized. (shrink)

This paper presents and defends an argument that the continuum hypothesis is false, based on considerations about objective chance and an old theorem due to Banach and Kuratowski. More specifically, I argue that the probabilistic inductive methods standardly used in science presuppose that every proposition about the outcome of a chancy process has a certain chance between 0 and 1. I also argue in favour of the standard view that chances are countably additive. Since it is possible to randomly pick (...) out a point on a continuum, for instance using a roulette wheel or by flipping a countable infinity of fair coins, it follows, given the axioms of ZFC, that there are many different cardinalities between countable infinity and the cardinality of the continuum. (shrink)

The thesis that probabilities of conditionals are conditional probabilities has putatively been refuted many times by so-called ‘triviality results’, although it has also enjoyed a number of resurrections. In this paper I assault it yet again with a new such result. I begin by motivating the thesis and discussing some of the philosophical ramifications of its fluctuating fortunes. I will canvas various reasons, old and new, why the thesis seems plausible, and why we should care about its fate. I will (...) look at some objections to Lewis’s famous triviality results, and thus some reasons for the pursuit of further triviality results. I will generalize Lewis’s results in ways that meet the objections. I will conclude with some reflections on the demise of the thesis—or otherwise. (shrink)

Philosophical Perspectives, Volume 35, Issue 1, Page 189-205, December 2021.

This paper revisits the Pasadena game (Nover and Háyek 2004), a St Petersburg-like game whose expectation is undefined. We discuss serveral respects in which the Pasadena game is even more troublesome for decision theory than the St Petersburg game. Colyvan (2006) argues that the decision problem of whether or not to play the Pasadena game is ‘ill-posed’. He goes on to advocate a ‘pluralism’ regarding decision rules, which embraces dominance reasoning as well as maximizing expected utility. We rebut Colyvan’s argument, (...) offering several considerations in favour of the Pasadena decision problem being well posed. To be sure, current decision theory, which is underpinned by various preference axioms, leaves indeterminate how one should value the Pasadena game. But we suggest that determinacy might be achieved by adding further preference axioms. We conclude by opening the door to a far greater plurality of decision rules. We suggest how the goal of unifying these rules might guide future research. (shrink)

So-called “traditional epistemology” and “Bayesian epistemology” share a word, but it may often seem that the enterprises hardly share a subject matter. They differ in their central concepts. They differ in their main concerns. They differ in their main theoretical moves. And they often differ in their methodology. However, in the last decade or so, there have been a number of attempts to build bridges between the two epistemologies. Indeed, many would say that there is just one branch of philosophy (...) here—epistemology. There is a common subject matter after all. In this paper, we begin by playing the role of a “bad cop,” emphasizing many apparent points of disconnection, and even conflict, between the approaches to epistemology. We then switch role, playing a “good cop” who insists that the approaches are engaged in common projects after all. We look at various ways in which the gaps between them have been bridged, and we consider the prospects for bridging them further. We conclude that this is an exciting time for epistemology, as the two traditions can learn, and have started learning, from each other. (shrink)

I re-examine Coherence Arguments (Dutch Book Arguments, No Arbitrage Arguments) for diachronic constraints on Bayesian reasoning. I suggest to replace the usual game–theoretic coherence condition with a new decision–theoretic condition ('Diachronic Sure Thing Principle'). The new condition meets a large part of the standard objections against the Coherence Argument and frees it, in particular, from a commitment to additive utilities. It also facilitates the proof of the Converse Dutch Book Theorem. I first apply the improved Coherence Argument to van Fraassen's (...) (1984) Reflection principle. I then point out the failure of a Coherence Argument that is intended to support Conditionalization as a naive, universal, update rule. I also point out that Reflection is incompatible with the universal use of Conditionalization thus interpreted. The Coherence Argument therefore defeats the naive view on Bayesian learning that it was originally designed to justify. (shrink)

Maximum-likelihood updating is a well-known approach for extending static ambiguity sensitive preferences to dynamic set-ups. This paper develops an example in which MLU induces an ambiguity averse maxmin expected utility decision-maker to prefer a bet on an ambiguous over a risky urn and be more willing to bet on the ambiguous urn compared to an subjective expected utility decision-maker. This is challenging, since prior to observing draws from the urns, the MEU decision-maker actually preferred the risky over the ambiguous bet (...) and was less willing to bet on the ambiguous urn than the SEU decision-maker. The identified switch in betting preferences is not due to a violation of dynamic consistency or consequentialism. Rather, it results from MLU’s selection of extreme priors, causing a violation of the stability of set inclusion over the course of the updating process. (shrink)

ArgumentThe main contribution of the Alfred P. Sloan and Russell Sage Foundations' behavioral economics program (1984–1992) was not the resources it provided, which were relatively modest. Instead, the program's contribution lay in catalyzing “a sense of mission” in the collaboration between psychologists Daniel Kahneman and Amos Tversky, economist Richard Thaler, and their associates. Partly this reflected the common strategy of American foundations to pick an individual or small group of scientists and stick with them until scientific success had been achieved. (...) But moreover, it was a consequence of the careful management of the program's director Eric Wanner. The various actors involved in the behavioral economics program constructed a new behavioral economic sub-discipline in economics by tapping into existing missionary sentiments in the economic and psychological disciplines, while at the same time actively shaping this sense of mission. (shrink)

Most investigations into how people make risky choices have employed a simple drosophila: monetary gambles involving stated outcomes and probabilities. People are asked to make decisions from description . When people decide whether to back up their computer hard drive, cross a busy street, or go out on a date, however, they do not enjoy the convenience of stated outcomes and probabilities. People make such decisions either in the void of ignorance or in the twilight of their own often limited (...) experience of such real-world options. In the latter case, they make decisions from experience . Recent research has consistently documented that decisions from description and decisions from experience can lead to substantially different choices. Key in this description–experience gap is people’s treatment of rare events. In this paper, I briefly review studies that have documented the description–experience gap, offer several explanations for this gap, and discuss to what extent people’s decisions from experience are in conflict with benchmarks of rationality. (shrink)

We often need to have beliefs about things on which we are not experts. Luckily, we often have access to expert judgements on such topics. But how should we form our beliefs on the basis of expert opinion when experts conflict in their judgments? This is the core of the novice/2-expert problem in social epistemology. A closely related question is important in the context of policy making: how should a policy maker use expert judgments when making policy in domains in (...) which she is not herself an expert? This question is more complex, given the messy and strategic nature of politics. In this paper we argue that the prediction with expert advice framework from machine learning provides helpful tools for addressing these problems. We outline conditions under which we should expert PWEA to be helpful and those under which we should not expect these methods to perform well. (shrink)

Conditioning can make imprecise probabilities uniformly more imprecise. We call this effect "dilation". In a previous paper (1993), Seidenfeld and Wasserman established some basic results about dilation. In this paper we further investigate dilation on several models. In particular, we consider conditions under which dilation persists under marginalization and we quantify the degree of dilation. We also show that dilation manifests itself asymptotically in certain robust Bayesian models and we characterize the rate at which dilation occurs.

There has been considerable puzzlement over how to respond to higher-order evidence. The existing dilemmas can be defused by adopting a ‘two-dimensional’ representation of doxastic attitudes which incorporates not only substantive uncertainty about which first-order state of affairs obtains but also the degree of conviction with which we hold the attitude. This makes it possible that in cases of higher-order evidence the evidence sometimes impacts primarily on our conviction, rather than our substantive uncertainty. I argue that such a two-dimensional representation (...) is naturally developed by making use of imprecise probabilities. (shrink)

We discuss the meaning of probabilities in the many worlds interpretation of quantum mechanics. We start by presenting very briefly the many worlds theory, how the problem of probability arises, and some unsuccessful attempts to solve it in the past. Then we criticize a recent attempt by Deutsch to derive the quantum mechanical probabilities from the nonprobabilistic parts of quantum mechanics and classical decision theory. We further argue that the Born probability does not make sense even as an additional probability (...) rule in the many worlds theory. Our conclusion is that the many worlds theory fails to account for the probabilistic statements of standard (collapse) quantum mechanics. (shrink)

Laudan famously argued that neither truth nor approximate truth can be part of an explanation of a scientific theory's predictive success because in the history of science there were theories that enjoyed some limited success but now are considered outright false. The power of his argument lay in the many historic examples he listed . Realists have disputed that all theories on Laudan's list can be regarded as predictively successful but let's suppose momentarily that at least some exist that support (...) his point. In this case, there are historic false theories that made some true predictions. We are aiming for a general explanation of a theory's predictive success and hence these false theories necessarily are on board. Now, Laudan also argues that historic false theories – the downright false ones and the ones we nowadays judge as strictly false, but approximately true – do not in any principled sense differ from the ones we presently accept. These theories seem to present a good basis for inductively inferring that any presently accepted scientific theory is actually false. Many presently accepted theories certainly are predictively successful to a great extent and certainly their success should be covered by an acceptable explanation. Since there seems to be inductive support for the conclusion that …. (shrink)

Innovative research on decision making under ‘deep uncertainty’ is underway in applied fields such as engineering and operational research, largely outside the view of normative theorists grounded in decision theory. Applied methods and tools for decision support under deep uncertainty go beyond standard decision theory in the attention that they give to the structuring of decisions. Decision structuring is an important part of a broader philosophy of managing uncertainty in decision making, and normative decision theorists can both learn from, and (...) contribute to, the growing deep uncertainty decision support literature. (shrink)

Set-valued choice functions provide a framework that is general enough to encompass a wide variety of theories that are significant to the study of rationality but, at the same time, offer enough structure to articulate consistency conditions that can be used to characterize some of the theories within this encompassed variety. Nonetheless, two-tiered choice functions, such as those advocated by Isaac Levi, are not easily characterized within the framework of set-valued choice functions. The present work proposes conditional choice functions as (...) the proper carriers of synchronic rationality. The resulting framework generalizes the familiar one mentioned above without emptying it and, moreover, provides a natural setting for two-tiered choice rules. (shrink)

Though he maintained a significant interest in theoretical aspects of measurement, Henry E. Kyburg, Jr. was critical of the representational theory that in many ways has come to dominate discussions concerning the foundations of measurement. In particular, Kyburg (in Savage and Ehrlich (eds) Philosophical and foundational issues in measurement theory, 1992 ) asserts that the representational theory of measurement, as introduced in (Scott and Suppes, Journal of Symbolic Logic, 23:113–128, 1958 ) and developed in (Krantz et al., Foundations of measurment: (...) additive and polynomial representations. Academic Press, 1971 ), cannot account for the measurement of error. The present work examines and responds to this charge. (shrink)

We propose an approach to assigning propositional content to deliberate acts of arbitrary type, as opposed to just speech acts. This approach, which is based on the idea that the content of an act is the decision maker's expectation concerning the change that would take place if the act were to be performed, is shown to be related to the concept of expected utility that has played a central role in various accounts of rationality.

Anyone who has ever lived with roommates understands the Hobbesian state of nature implicitly. People sharing accommodations quickly discover that buying groceries, doing the dishes, sweeping the floor, and a thousand other household tasks, are all prisoner's dilemmas waiting to happen. For instance, if food is purchased communally, it gives everyone an incentive to overconsume. Individuals also have an incentive to buy expensive items that the others are unlikely to want. As a result, everyone's food bill will be higher than (...) it would be if everyone did their own shopping. Things are not much better when it comes to other aspects of household organization. Cleaning is a common sticking point. Once there are a certain number of people living in a house, cleanliness becomes a quasi-public good. If everyone ‘pitched in’ to clean up, then everyone would be happier. But there is a free-rider incentive—before cleaning, it's best to wait around a bit to see if someone else will do it. As a result, the dishes will stack up in the sink, the carpet will get grungy, and so on. (shrink)

Anyone who has ever lived with roommates understands the Hobbesian state of nature implicitly. People sharing accommodations quickly discover that buying groceries, doing the dishes, sweeping the floor, and a thousand other household tasks, are all prisoner's dilemmas waiting to happen. For instance, if food is purchased communally, it gives everyone an incentive to overconsume. Individuals also have an incentive to buy expensive items that the others are unlikely to want. As a result, everyone's food bill will be higher than (...) it would be if everyone did their own shopping. Things are not much better when it comes to other aspects of household organization. Cleaning is a common sticking point. Once there are a certain number of people living in a house, cleanliness becomes a quasi-public good. If everyone ‘pitched in’ to clean up, then everyone would be happier. But there is a free-rider incentive—before cleaning, it's best to wait around a bit to see if someone else will do it. As a result, the dishes will stack up in the sink, the carpet will get grungy, and so on. (shrink)

I will describe the logics of a range of conditionals that behave like conditional probabilities at various levels of probabilistic support. Families of these conditionals will be characterized in terms of the rules that their members obey. I will show that for each conditional, →, in a given family, there is a probabilistic support level r and a conditional probability function P such that, for all sentences C and B, 'C → B' holds just in case P[B | C] ≥ (...) r. Thus, each conditional in a given family behaves like conditional probability above some specific support level. (shrink)

This paper takes issue with an influential interpretationist argument for physicalism about intentionality based on the possibility of radical interpretation. The interpretationist defends the physicalist thesis that the intentional truths supervene on the physical truths by arguing that it is possible for a radical interpreter, who knows all of the physical truths, to work out the intentional truths about what an arbitrary agent believes, desires, and means without recourse to any further empirical information. One of the most compelling arguments for (...) the possibility of radical interpretation, associated most closely with David Lewis and Donald Davidson, gives a central role to decision theoretic representation theorems, which demonstrate that if an agent’s preferences satisfy certain constraints, it is possible to deduce probability and utility functions that represent her beliefs and desires. We argue that an interpretationist who wants to rely on existing representation theorems in defence of the possibility of radical interpretation faces a trilemma, each horn of which is incompatible with the possibility of radical interpretation. (shrink)

A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at ‘nudging’ people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and philosophers around the normative limits of paternalism, especially by technical policy advisors. One recent suggestion has been that ‘boosting,’ in which interventions aim to enhance people’s general cognitive skills and representational repertoires instead of manipulating their choice (...) environments behind their backs, avoids the main normative challenges. A limitation in most of this literature is that it has focused on relatively sweeping policy recommendations and consequently on strong polar alternatives of general paternalism and strict laissez faire. We review a real instance, drawn from a consulting project we conducted for an investment bank, of a proposed intervention that is more typical of the kind that economists are more often actually called upon to offer. In this example, the sophistication of current tools for preference attribution, combined with philosophical externalism about the semantics of preferences that makes it less plausible to attribute their literal self-conscious representation to people as propositional attitude content becomes more tightly refined, blocks applicability of the distinction between nudging and boosting. This seems to call for irreducible, context-specific ethical judgment in assessing the appropriateness of the forms of paternalism that economists must actually wrestle with in going about their everyday business. (shrink)

Much behavioral welfare economics assumes that expected utility theory does not accurately describe most human choice under risk. A substantial literature instead evaluates welfare consequences by taking cumulative prospect theory as the natural default alternative, at least where description is concerned. We present evidence, based on a review of previous literature and new experimental data, that the most empirically adequate hypothesis about human choice under risk is that it is heterogeneous, and that where EUT does not apply, more choice is (...) characterized by rank-dependent utility models than by CPT. Most of the apparently loss-averse choice behavior results from probability weighting rather than from direct disutility experienced when an outcome is framed as a loss against an idiosyncratic reference point. We then consider implications of this finding for methodological debates about how to model welfare effects of policies, and argue that abandonment of a dogmatic belief in CPT as the correct theory of risk human choice exposes a conceptual error that is widespread in behavioral welfare economics. We provide concluding reflections on second-order, philosophical issues around the grounding of normative commitments in policy-focused economics. (shrink)

Although the subjective expected utility (SEU) theory is more than 60 years old, it was recently discovered by Hartmann (Econometrica 88(1):203–205, 2020, https://doi.org/10.3982/ECTA17428) that one of the original seven postulates is redundant, i.e., it is implied by the other six postulates. In this brief communication, we show that this redundant axiom is the only one that is implied by the other axioms, thereby establishing that the remaining six postulates form an independent axiomatic system. This result further streamlines the preference assumptions (...) underlying the SEU theory. (shrink)

The ultimatum game is a simple bargaining situation where the behavior of people frequently contradicts the optimal strategy according to classical game theory. Thus, according to many scholars, the commonly observed behavior should be considered irrational. We argue that this putative irrationality stems from a wrong conception of metanormativity (the study of norms about the establishment of norms). After discussing different metanormative conceptions, we defend a Quinean, naturalistic approach to the evaluation of norms. After reviewing empirical literature on the ultimatum (...) game, we argue that the common behavior in the ultimatum game is rational and justified. We therefore suggest that the norms of economic rationality should be amended. (shrink)

As van Fraassen pointed out in his opening remarks, Henry Kyburg's lottery paradox has long been known to raise difficulties in attempts to represent full belief as a probability greater than or equal to p, where p is some number less than 1. Recently, Patrick Maher has pointed out that to identify full belief with probability equal to 1 presents similar difficulties. In his paper, van Fraassen investigates ways of representing full belief by personal probability which avoid the difficulties raised (...) by Maher's measure-theoretic version of the lottery paradox. Van Fraassen's more subtle representation dissolves the simple identification of full belief with maximal personal probability. His investigation exploits the richer resources for representing opinion provided by taking conditional, rather than unconditional, personal probability as fundamental. It has interesting implications for equivalent alternative approaches based on non-Archimedean probability, as well as for equivalent approaches in which assumption contexts representing full belief relative to suppositions are taken as fundamental. (shrink)