Suppose that you prefer A to B, B to C, and C to A. Your preferences violate Expected Utility Theory by being cyclic. Money-pump arguments offer a way to show that such violations are irrational. Suppose that you start with A. Then you should be willing to trade A for C and then C for B. But then, once you have B, you are offered a trade back to A for a small cost. Since you prefer A to B, you (...) pay the small sum to trade from B to A. But now you have been turned into a money pump. You are back to the alternative you started with but with less money. This Element shows how each of the axioms of Expected Utility Theory can be defended by money-pump arguments of this kind. The Element also defends money-pump arguments from the standard objections to this kind of approach. This title is also available as Open Access on Cambridge Core. (shrink)

Why does performing certain tasks cause the aversive experience of mental effort and concomitant deterioration in task performance? One explanation posits a physical resource that is depleted over time. We propose an alternative explanation that centers on mental representations of the costs and benefits associated with task performance. Specifically, certain computational mechanisms, especially those associated with executive function, can be deployed for only a limited number of simultaneous tasks at any given moment. Consequently, the deployment of these computational mechanisms carries (...) an opportunity cost – that is, the next-best use to which these systems might be put. We argue that the phenomenology of effort can be understood as the felt output of these cost/benefit computations. In turn, the subjective experience of effort motivates reduced deployment of these computational mechanisms in the service of the present task. These opportunity cost representations, then, together with other cost/benefit calculations, determine effort expended and, everything else equal, result in performance reductions. In making our case for this position, we review alternative explanations for both the phenomenology of effort associated with these tasks and for performance reductions over time. Likewise, we review the broad range of relevant empirical results from across sub-disciplines, especially psychology and neuroscience. We hope that our proposal will help to build links among the diverse fields that have been addressing similar questions from different perspectives, and we emphasize ways in which alternative models might be empirically distinguished. (shrink)

Is an outcome where many people are saved and one person dies better than an outcome where the one is saved and the many die? According to the standard utilitarian justification, the former is better because it has a greater sum total of well-being. This justification involves a controversial form of moral aggregation, because it is based on a comparison between aggregates of different people's well-being. Still, an alternative justification—the Argument for Best Outcomes—does not involve moral aggregation. I extend the (...) Argument for Best Outcomes to show that any utilitarian evaluation can be justified without moral aggregation. (shrink)

Rational choice theory enjoys unprecedented popularity and influence in the behavioral and social sciences, but it generates intractable problems when applied to socially interactive decisions. In individual decisions, instrumental rationality is defined in terms of expected utility maximization. This becomes problematic in interactive decisions, when individuals have only partial control over the outcomes, because expected utility maximization is undefined in the absence of assumptions about how the other participants will behave. Game theory therefore incorporates not only rationality but also common (...) knowledge assumptions, enabling players to anticipate their co-players' strategies. Under these assumptions, disparate anomalies emerge. Instrumental rationality, conventionally interpreted, fails to explain intuitively obvious features of human interaction, yields predictions starkly at variance with experimental findings, and breaks down completely in certain cases. In particular, focal point selection in pure coordination games is inexplicable, though it is easily achieved in practice; the intuitively compelling payoff-dominance principle lacks rational justification; rationality in social dilemmas is self-defeating; a key solution concept for cooperative coalition games is frequently inapplicable; and rational choice in certain sequential games generates contradictions. In experiments, human players behave more cooperatively and receive higher payoffs than strict rationality would permit. Orthodox conceptions of rationality are evidently internally deficient and inadequate for explaining human interaction. Psychological game theory, based on nonstandard assumptions, is required to solve these problems, and some suggestions along these lines have already been put forward. Key Words: backward induction; Centipede game; common knowledge; cooperation; epistemic reasoning; game theory; payoff dominance; pure coordination game; rational choice theory; social dilemma. (shrink)

The basic axioms or formal conditions of decision theory, especially the ordering condition put on preferences and the axioms underlying the expected utility formula, are subject to a number of counter-examples, some of which can be endowed with normative value and thus fall within the ambit of a philosophical reflection on practical rationality. Against such counter-examples, a defensive strategy has been developed which consists in redescribing the outcomes of the available options in such a way that the threatened axioms or (...) conditions continue to hold. We examine how this strategy performs in three major cases: Sen's counterexamples to the binariness property of preferences, the Allais paradox of EU theory under risk, and the Ellsberg paradox of EU theory under uncertainty. We find that the strategy typically proves to be lacking in several major respects, suffering from logical triviality, incompleteness, and theoretical insularity. To give the strategy more structure, philosophers have developed “principles of individuation”; but we observe that these do not address the aforementioned defects. Instead, we propose the method of checking whether the strategy can overcome its typical defects once it is given a proper theoretical expansion. We find that the strategy passes the test imperfectly in Sen's case and not at all in Allais's. In Ellsberg's case, however, it comes close to meeting our requirement. But even the analysis of this more promising application suggests that the strategy ought to address the decision problem as a whole, rather than just the outcomes, and that it should extend its revision process to the very statements it is meant to protect. Thus, by and large, the same cautionary tale against redescription practices runs through the analysis of all three cases. A more general lesson, simply put, is that there is no easy way out from the paradoxes of decision theory. (shrink)

How do you make decisions under ignorance? That is, how do you decide when you lack subjective probabilities for some of your options’ possible outcomes? One answer is that you follow the Laplace Rule: you assign an equal probability to each state of nature for which you lack a subjective probability (that is, you use the Principle of Indifference) and then you maximize expected utility. The most influential objection to the Laplace Rule is that it is sensitive to the individuation (...) of states of nature. This sensitivity is problematic because the individuation of states seems arbitrary. In this paper, however, I argue that this objection proves too much. I argue that all plausible rules for decisions under ignorance are sensitive to the individuation of states of nature. (shrink)

Kenneth Arrow’s “impossibility” theorem—or “general possibility” theorem, as he called it—answers a very basic question in the theory of collective decision-making. Say there are some alternatives to choose among. They could be policies, public projects, candidates in an election, distributions of income and labour requirements among the members of a society, or just about anything else. There are some people whose preferences will inform this choice, and the question is: which procedures are there for deriving, from what is known or (...) can be found out about their preferences, a collective or “social” ordering of the alternatives from better to worse? The answer is startling. Arrow’s theorem says there are no such procedures whatsoever—none, anyway, that satisfy certain apparently quite reasonable assumptions concerning the autonomy of the people and the rationality of their preferences. The technical framework in which Arrow gave the question of social orderings a precise sense and its rigorous answer is now widely used for studying problems in welfare economics. The impossibility theorem itself set much of the agenda for contemporary social choice theory. Arrow accomplished this while still a graduate student. In 1972, he received the Nobel Prize in economics for his contributions. (shrink)

The standard argument for the claim that rational preferences are transitive is the pragmatic money-pump argument. However, a money-pump only exploits agents with cyclic strict preferences. In order to pump agents who violate transitivity but without a cycle of strict preferences, one needs to somehow induce such a cycle. Methods for inducing cycles of strict preferences from non-cyclic violations of transitivity have been proposed in the literature, based either on offering the agent small monetary transaction premiums or on multi-dimensional preferences. (...) This paper argues that previous proposals have been flawed and presents a new approach based on the dominance principle. (shrink)

This article deals with the rationality and functionality of the existence of regret and its influence on decision making. First, regret is defined as a negative, cognitively based emotion that we experience when realizing or imagining that our present situation would have been better had we acted differently. Next, it is discussed whether this experience can be considered rational and it is argued that rationality only applies to what we do with our regrets, not to the experience itself. Then, research (...) is reviewed showing that both the anticipation of future regret and the experience of retrospective regret influence behavior. The influence of anticipated regret can be considered rational as long as the decision maker can accurately predict the regret that may result from the decision. The influence of experienced regret cannot be considered rational, since decisions should be based on future outcomes, not historical ones. However, influence of experienced regret can be called functional since it may result in increased learning from our mistakes. (shrink)

Rawls intended the difference principle to be a liberal egalitarian principle of justice. By that I mean he intended it to provide a moral justification for a moderate amount of redistribution of income from the most advantaged members of society to the least. But since the difference principle was introduced, economic inequality has increased dramatically, reaching levels now not seen since just before the Great Depression, levels that Rawls surely would have thought perverse. Many blame this increase on the rise (...) of supply-side economics and the dramatic cuts in marginal tax rates enacted by the supply-siders for corporations and those already at the top of the income distribution. But I contend that the difference principle, or at least the ethos that the difference principle embodies and represents, is also partially to blame. Accordingly, the purpose of this paper is to explain how the difference principle, the ideas and arguments of the supply-siders, and this dramatic rise in inequality are connected, to identify where the difference principle went wrong, and to discuss what those who remain committed to the liberal egalitarian ideals that the difference principle was thought to represent might do about it. (shrink)

This thesis consists of an introduction and five essays on decision theory.

In an alleged counter-example to the completeness of rational preferences, a career as a clarinettist is compared with a career in law. It seems reasonable to neither want to judge that the law career is at least as preferred as the clarinet career nor want to judge that the clarinet career is at least as preferred as the law career. The two standard interpretations of examples of this kind are, first, that the examples show that preferences are rationally permitted to (...) be incomplete and, second, that the examples show that preferences are rationally permitted to be indeterminate. In this paper, I shall argue that the difference between these interpretations is crucial for the money-pump argument for transitivity, which is the standard argument that rational preferences are transitive. I shall argue that the money-pump argument for transitivity fails if preferences are rationally permitted to be incomplete but that it works if preferences are rationally permitted to be indeterminate and rationally required to be complete. (shrink)

We provide a critical assessment of the ambiguity aversion literature, which we characterize in terms of the view that Ellsberg choices are rational responses to ambiguity, to be explained by relaxing Savage's Sure-Thing principle and adding an ambiguity-aversion postulate. First, admitting Ellsberg choices as rational leads to behaviour, such as sensitivity to irrelevant sunk cost, or aversion to information, which most economists would consider absurd or irrational. Second, we argue that the mathematical objects referred to as “beliefs” in the ambiguity (...) aversion literature have little to do with how an economist or game theorist understands and uses the concept. This is because of the lack of a useful notion of updating. Third, the anomaly of the Ellsberg choices can be explained simply and without tampering with the foundations of choice theory. These choices can arise when decision makers form heuristics that serve them well in real-life situations where odds are manipulable, and misapply them to experimental settings. (shrink)

We consider a setting where a decision maker’s uncertainty is represented by a set of probability measures, rather than a single measure. Measure-by-measure updating of such a set of measures upon acquiring new information is well known to suffer from problems. To deal with these problems, we propose using weighted sets of probabilities: a representation where each measure is associated with a weight, which denotes its significance. We describe a natural approach to updating in such a situation and a natural (...) approach to determining the weights. We then show how this representation can be used in decision making, by modifying a standard approach to decision making—minimizing expected regret—to obtain minimax weighted expected regret. We provide an axiomatization that characterizes preferences induced by MWER both in the static and dynamic case. (shrink)

This article provides unified axiomatic foundations for the most common optimality criteria in statistical decision theory. It considers a decision maker who faces a number of possible models of the world (possibly corresponding to true parameter values). Every model generates objective probabilities, and von Neumann–Morgenstern expected utility applies where these obtain, but no probabilities of models are given. This is the classic problem captured by Wald’s (Statistical decision functions, 1950) device of risk functions. In an Anscombe–Aumann environment, I characterize Bayesianism (...) (as a backdrop), the statistical minimax principle, the Hurwicz criterion, minimax regret, and the “Pareto” preference ordering that rationalizes admissibility. Two interesting findings are that c-independence is not crucial in characterizing the minimax principle and that the axiom which picks minimax regret over maximin utility is von Neumann–Morgenstern independence. (shrink)

This paper contributes to a theory of rational choice for decision-makers with incomplete preferences due to partial ignorance, whose beliefs are representable as sets of acceptable priors. We focus on the limiting case of `Complete Ignorance' which can be viewed as reduced form of the general case of partial ignorance. Rationality is conceptualized in terms of a `Principle of Preference-Basedness', according to which rational choice should be isomorphic to asserted preference. The main result characterizes axiomatically a new choice-rule called `Simultaneous (...) Expected Utility Maximization'. It can be interpreted as agreement in a bargaining game (Kalai-Smorodinsky solution) whose players correspond to the (extremal) `acceptable priors' among which the decision maker has suspended judgment. An essential but non-standard feature of Simultaneous Expected Utility choices is their dependence on the entire choice set. This is justified by the conception of optimality as compromise rather than as superiority in pairwise comparisons. (shrink)

The nature of evidence is a problem for epistemology, but I argue that this problem intersects with normative decision theory in a way that I think is underappreciated. Among some decision theorists, there is a presumption that one can always ignore the nature of evidence while theorizing about principles of rational choice. In slogan form: decision theory only cares about the credences agents actually have, not the credences they should have. I argue against this presumption. In particular, I argue that (...) if evidence can be unspecific, then an alleged counterexample to causal decision theory fails. This implies that what theory of decision we think is true may depend on our opinions regarding the nature of evidence. Even when we are theorizing about subjective theories of rationality, we cannot set aside questions about the objective nature of evidence. (shrink)

Recent developments in neuroscience and social science are illuminating the critical importance of regret in human choices, including criminal decision making. After differentiating regret from related emotions (e.g., disappointment, sadness, shame), I argue that regret can prompt desistance from crime and that regret avoidance is a powerful mechanism of conformity. I then turn to American and European penal history to demonstrate that the invention of the prison was premised on the notion that solitary confinement could inculcate regret in prisoners and (...) thereby change them profoundly. The place of regret in both historical and emerging thinking about human choice underscores its importance for understanding the connections between emotions and criminality. (shrink)

This article concerns the prescriptive function of decision analysis. Consider an agent who must choose an action yielding welfare that varies with an unknown state of nature. It is often asserted that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he (...) actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. Any choice respecting weak and stochastic dominance is rational from the actualist perspective. (shrink)

After explaining the well-known two-envelope paradox by indicating the fallacy involved, we consider the two-envelope problem of evaluating the factual information provided to us in the form of the value contained by the envelope chosen first. We try to provide a synthesis of contributions from economy, psychology, logic, probability theory (in the form of Bayesian statistics), mathematical statistics (in the form of a decision-theoretic approach) and game theory. We conclude that the two-envelope problem does not allow a satisfactory solution. An (...) interpretation is made for statistical science at large. (shrink)

This paper focuses on the normative analysis—in the sense of the classic decision-theoretic formulation—of decision problems that arise in connection with forensic expert reporting. We distinguish this analytical account from other common types of decision analyses, such as descriptive approaches. While decision theory is, since several decades, an extensively discussed topic in legal literature, its use in forensic science is more recent, and with an emphasis on goals such as the analysis of the logical structure of forensic expert conclusions regarding, (...) for example, propositions of common source of evidential and known materials. Typical examples are so-called identification decisions, especially categorical conclusions according to which fingermarks come from a particular a person of interest. We will present and compare ways of stating forensic identification decisions in decision-theoretic terms and explain their underlying rationale. In particular, we will emphasize the importance of viewing this analysis as normative in the sense of providing a reflective rather than a prescriptive reference point against which people in charge of forensic identification decisions may compare their otherwise intuitive and informal reasoning, before acting. Normative decision analysis in forensic science thus provides a vector through which current practice can be articulated, scrutinized and rethought. (shrink)

This paper works within a particular framework for reasoning about actions—sometimes known as the framework of “stit semantics”—originally due to Belnap and Perloff, based ultimately on the theory of indeterminism set out in Prior’s indeterministic tense logic, and developed in full detail by Belnap, Perloff, and Xu [3]. The issues I want to consider arise when certain normative, or decision theoretic, notions are introduced into this framework: here I will focus on the notion of a right action, and so on (...) the formulation of act utilitarianism within this indeterministic setting. The problem is simply that there are two different, and conflicting, ways of defining this notion, both well-motivated, and both carrying intuitive weight. (shrink)

Epistemic rationality is typically taken to be immodest at least in this sense: a rational epistemic state should always take itself to be doing at least as well, epistemically and by its own light, than any alternative epistemic state. If epistemic states are probability functions and their alternatives are other probability functions defined over the same collection of proposition, we can capture the relevant sense of immodesty by claiming that epistemic utility functions are (strictly) proper. In this paper I examine (...) what happens if we allow for the alternatives to an epistemic state to include probability functions with different domains. I first prove an impossibility result: on minimal assumptions, I show that there is no way of vindicating strong immodesty principles to the effect that any probability function should take itself to be doing at least as well than any alternative probability function, regardless of its domain. I then consider alternative, weaker generalizations of the traditional immodesty principle and prove some characterization results for some classes of epistemic utility functions satisfying each of the relevant principles. (shrink)

This paper starts out from the proposition that case-based decision theory is an appropriate tool to explain human decision behavior in situations of structural ignorance. Although the developers of CBDT suggest its reality adequacy, CBDT has not yet been tested empirically very often, especially not in repetitive decision situations. Therefore, our main objective is to analyse the decision behavior of subjects in a repeated-choice experiment by comparing the explanation power of CBDT to reinforcement learning and to classical decision criteria under (...) uncertainty namely maximin, maximax, and pessimism-optimism. Our findings substantiate a predominant significantly higher validity of CBDT compared to the classical criteria and to reinforcement learning. For this reason, the experimental results confirm the suggested reality adequacy of CBDT in repetitive decision situations of structural ignorance. (shrink)

The article focusses on grey system theory and its methodological foundations. Key topics include: axiomatisation of the concept of grey, comparison of grey systems theory with fuzzy logic and probabilistic approaches, and methodological development of the systems approach in grey data modelling. The article discusses in detail the challenges of defining grey space, grey functions, and their applications in solving the methodological problems of grey systems theory. The differences between grey systems theory and other analytical methodologies are highlighted, paying attention (...) to the specifics of the data and the research context and epistemological perspective. (shrink)

It is often suggested that when opinions differ among individuals in a group, the opinions should be aggregated to form a compromise. This paper compares two approaches to aggregating opinions, linear pooling and what I call opinion agglomeration. In evaluating both strategies, I propose a pragmatic criterion, No Regrets, entailing that an aggregation strategy should prevent groups from buying and selling bets on events at prices regretted by their members. I show that only opinion agglomeration is able to satisfy the (...) demand. I then proceed to give normative and empirical arguments in support of the pragmatic criterion for opinion aggregation, and that ultimately favor opinion agglomeration. (shrink)

One central objection to the maximin payoff criterion is that it focuses on the state that yields the lowest payoffs regardless of how low these are. We allow different states to have different sets of possible outcomes and show that the original axioms of Milnor (1954) continue to characterize the maximin payoff criterion, provided that the sets of payoffs achievable across states overlap. If instead payoffs in some states are always lower than in all others then ignoring the “bad” states (...) is no longer inconsistent with these axioms. Similar dependence on overlap of outcome spaces across states holds for the minimax regret and maximin joy criteria. (shrink)

The menu-dependent nature of regret-minimization creates subtleties when it is applied to dynamic decision problems. It is not clear whether forgone opportunities should be included in the menu. We explain commonly observed behavioral patterns as minimizing regret when forgone opportunities are present. If forgone opportunities are included, we can characterize when a form of dynamic consistency is guaranteed.

This commentary focuses on the parts of psychological game theory dealing with preference, as illustrated by team reasoning, and supports the conclusion that these theoretical notions do not contribute above and beyond existing theory in understanding social interaction. In particular, psychology and games are already bridged by a comprehensive, formal, and inherently psychological theory, interdependence theory (Kelley & Thibaut 1978; Kelley et al. 2003), which has been demonstrated to account for a wide variety of social interaction phenomena.

My dissertation explores the ways in which Rudolf Carnap sought to make philosophy scientific by further developing recent interpretive efforts to explain Carnap’s mature philosophical work as a form of engineering. It does this by looking in detail at his philosophical practice in his most sustained mature project, his work on pure and applied inductive logic. I, first, specify the sort of engineering Carnap is engaged in as involving an engineering design problem and then draw out the complications of design (...) problems from current work in history of engineering and technology studies. I then model Carnap’s practice based on those lessons and uncover ways in which Carnap’s technical work in inductive logic takes some of these lessons on board. This shows ways in which Carnap’s philosophical project subtly changes right through his late work on induction, providing an important corrective to interpretations that ignore the work on inductive logic. Specifically, I show that paying attention to the historical details of Carnap’s attempt to apply his work in inductive logic to decision theory and theoretical statistics in the 1950s and 1960s helps us understand how Carnap develops and rearticulates the philosophical point of the practical/theoretical distinction in his late work, offering thus a new interpretation of Carnap’s technical work within the broader context of philosophy of science and analytical philosophy in general. (shrink)

In this paper I study Milton Friedman’s statistical education, paying special attention to the different methodological approaches (Fisher, Neyman and Savage) to which he was exposed. I contend that these statistical procedures involved different views as to the evaluation of statistical predictions. In this light, the thesis defended in Friedman’s 1953 methodological essay appears substantially ungrounded.

Reedición del artículo publicado on-line en la Enciclopedia de Filosofía de la Sociedad Española de Filosofía Analítica.

The Efficient Market Hypothesis often seems to suggest only that most people cannot outguess the financial markets. But the originator of the hypothesis, Eugene Fama, made the stronger claim that people cannot outguess the financial markets because financial-market prices are correct: They incorporate all known information accurately. This view omits the role that human traders’ interpretations of information must play if the information is to prompt them to buy or sell. Buyers and sellers disagree about the meaning of current information, (...) so at least half of them must be wrong. Bringing in many more (but equally fallible) people to predict the future does not somehow make their (collective) answer “right.” This is a logical disproof of the Fama hypothesis, but the inherently speculative nature of financial markets makes its empirical falsification (or verification) ambiguous if not impossible. The hypothesis must therefore be considered an unscientific article of faith. (shrink)

This paper comments on the history of the search for better election procedures, then discusses dimensions relevant to the evaluation and comparison of ompeting procedures. Its aim is to indicate the variety of factors involved in the search and to suggest an integrative perspective that could aid further research. The dimensions examined include the nomination process, agenda formation, candidate strategy, voter psychology and strategy, ballot forms and methods of aggregation, evaluative aspects of aggregation, incentive compatibility, costs and financing, and institutional (...) effects. (shrink)

Standard evolutionary game theory investigates the evolutionary fitness of alternative behaviors in a fixed and single decision problem. This paper instead focuses on decision criteria, rather than on simple behaviors, as the general behavioral rules under selection in the population: the evolutionary fitness of classic decision criteria for rational choice is analyzed through Monte Carlo simulations over various classes of decision problems. Overall, quantifying the uncertainty in a probabilistic way and maximizing expected utility turns out to be evolutionarily beneficial in (...) general. Minimizing regret also finds some evolutionary justifications in our results, while maximin seems to be always disadvantaged by differential selection. (shrink)

This volume is a collation of original contributions from the key actors of a new trend in the contemporary theory of knowledge and belief, that we call “dynamic epistemology”. It brings the works of these researchers under a single umbrella by highlighting the coherence of their current themes, and by establishing connections between topics that, up until now, have been investigated independently. It also illustrates how the new analytical toolbox unveils questions about the theory of knowledge, belief, preference, action, and (...) rationality, in a number of central axes in dynamic epistemology: temporal, social, probabilistic and even deontic dynamics. (shrink)

A number of recent reports and overviews on the ethical and societal problems of nanotechnology present a public that is polarized about nanotechnology. Very little responsible analysis can be found between those poles for two reasons. First, the debate about the highly controversial notion of molecular manufacturing introduced by Eric Drexler shaped much of the early discussion. Second, the polarization can be seen as a consequence of uncertainty about nanotechnology compounded by cognitive barriers. A reporter to UNESCO acknowledges that “…Assessments (...) of nanotechnology tend to radically diverge…These radically diverging assessments that have thus far dominated the debate on nanotechnology seem to be due to a lack of common ground.” The “lack of common ground” is not unprecedented in the history of technology, and scientists rightfully fear a new “GMO debacle.”. (shrink)

Laboratory experimentation was once considered impossible or irrelevant in economics. Recently, however, economic science has gone through a real ‘laboratory revolution’, and experimental economics is now a most lively subfield of the discipline. The methodological advantages and disadvantages of controlled experimentation constitute the main subject of this thesis. After a survey of the literature on experiments in philosophy and economics, the problem of testing normative theories of rationality is tackled. This philosophical issue was at the centre of a famous controversy (...) in decision theory, during which a methodology of normative falsification was first articulated and used to assess experimental results. In the third chapter, the methodological advantages of controlled experimentation are illustrated and discussed with examples taken from the experiments on the so-called ‘preference reversal’ phenomenon. Laboratory testing allows to establish with a high degree of certainty that certain phenomena lie behind the experimental data, by means of independent testing, elimination of alternative hypotheses, and the use of different instruments of observation. The fourth chapter is devoted to a conceptual analysis of the problem of ‘parallelism’. This is the problem of inferring from the occurrence of a phenomenon in the laboratory, to its instantiation also in non-laboratory environments. Experimental economists have discussed parallelism at length, and their views are presented and criticised. Eventually, it is argued that parallelism is a factual matter and as such can only be established on empirical grounds. The fifth chapter provides an example of how one can argue for parallelism, focusing on the case of experimentation on the ‘winner’s curse’ phenomenon. The role of experiments as ‘mediators’ between theoretical models and their target domain of application is illustrated, and the structure of parallelism arguments analysed in detail. Finally, in the last chapter, economic experiments are compared to simulations, in order to highlight their specific characteristics. (shrink)

There has been an upsurge of interest lately in developing Wigner’s hypothesis that conscious observation causes collapse by exploring dynamical collapse models in which some purportedly quantifiable aspect of consciousness resist superposition. Kremnizer–Ranchin, Chalmers–McQueen and Okon–Sebastián have explored the idea that collapse may be associated with a numerical measure of consciousness. More recently, Chalmers–McQueen have argued that any single measure is inadequate because it will allow superpositions of distinct states of equal consciousness measure to persist. They suggest a satisfactory model (...) needs to associate collapse with a set of measures quantifying aspects of consciousness, such as the “Q-shapes” defined by Tononi et al. in their “integrated information theory” of consciousness. I argue here that Chalmers–McQueen’s argument against associating a single measure with collapse requires a precise symmetry between brain states associated with different experiences and thus does not apply to the only case where we have strong intuitions, namely human observers. In defence of Chalmers–McQueen’s stance, it might be argued that idealized artificial information processing networks could display such symmetries. However, I argue that the most natural form of any theory that postulates a map from network states to mind states is one that assigns identical mind states to isomorphic network states. This suggests that, if such a map exists, no familiar components of mind states, such as viewing different colours, or experiencing pleasure or pain, are likely to be related by symmetries. (shrink)

It is natural for humans to judge the outcome of a decision under uncertainty as a percentage of an ex-post optimal performance. We propose a robust decision-making framework based on a relative performance index. It is shown that if the decision maker’s preferences satisfy quasisupermodularity, single-crossing, and a nondecreasing log-differences property, the worst-case relative performance index can be represented as the lower envelope of two extremal performance ratios. The latter is used to characterize the agent’s optimal robust decision, which has (...) implications both computationally and for obtaining closed-form solutions. We illustrate our results in an application which compares the performance of relative robustness to solutions that optimize worst-case payoffs, maximum absolute regret, and expected payoffs under a Laplacian prior. (shrink)

Simon introduced satisficing, but he did not provide a precise definition or analysis. Other researchers have subsequently interpreted satisficing in various ways, but a consensus perspective still has not emerged. This paper interprets satisficing as a class of decision strategies that a person might use when seeking to optimize in a setting where deliberation is costly. Costly deliberation lies at the heart of Simon’s motivation of satisficing, but he did not formalize the idea. I do so here, studying decision making (...) as a problem of minimax-regret planning in which costly deliberation enables a person to reduce ambiguity. I report simple specific findings on how the magnitude of deliberation costs may affect choice of a decision strategy. (shrink)

There is a growing interest in the foundations as well as the application of imprecise probability in contemporary epistemology. This dissertation is concerned with the application. In particular, the research presented concerns ways in which imprecise probability, i.e. sets of probability measures, may helpfully address certain philosophical problems pertaining to rational belief. The issues I consider are disagreement among epistemic peers, complete ignorance, and inductive reasoning with imprecise priors. For each of these topics, it is assumed that belief can be (...) modeled with imprecise probability, and thus there is a non-classical solution to be given to each problem. I argue that this is the case for peer disagreement and complete ignorance. However, I discovered that the approach has its shortcomings, too, specifically in regard to inductive reasoning with imprecise priors. Nevertheless, the dissertation ultimately illustrates that imprecise probability as a model of rational belief has a lot of promise, but one should be aware of its limitations also. (shrink)

Al-Najjar and Weinstein argue that the extant literature on ambiguity aversion is not successful in accounting for Ellsberg choices as rational responses to ambiguity. We concur, and propose that rational choice under ambiguity aims at robustness rather than avoidance of ambiguity. A central argument explains why robust choice is intrinsically context-dependent and legitimately violates standard choice consistency conditions. If choice consistency is forced, however, ambiguity-aversion emerges as a semi-rational response to ambiguity.

We examine if and to what extent choice dispositions can allow dependence on contexts and maintain consistency over time, in a dynamic environment under uncertainty. We focus on one of the context dependence properties, opportunity dependence because of being affected by anticipated regret, where the consequentialist choice framework is maintained. There are two sources of potential inconsistency: one is arrival of information, and the other is changing opportunities. First, we go over the general method of resolution of potential inconsistency, by (...) taking any kinds of inconsistency as given constraints. Second, we characterize a class of choice dispositions that are consistent to information arrival, but may be inconsistent to changing opportunities. Finally, we consider the overall requirement of dynamic consistency and show that it necessarily implies each of consistency to information arrival and independence of choice opportunities. The last result states that the two kinds of potential inconsistency cannot “compensate” each other to recover dynamic consistency overall. (shrink)