This paper presents a new solution to the problems for orthodox decision theory posed by the Pasadena game and its relatives. I argue that a key question raised by consideration of these gambles is whether evaluative compositionality (as I term it) is a requirement of rationality: is the value that an ideally rational agent places on a gamble determined by the values that she places on its possible outcomes, together with their mode of composition into the gamble (i.e. the probabilities (...) assigned to them)? The paper first outlines a certain simple response to the Pasadena game and identifies two problems with this response, the second of which is that it leads to a wholesale violation of evaluative compositionality. I then argue that rationality does not require decision makers to factor in outcomes of arbitrarily low probability. A method for making decisions which flows from this basic idea is then developed, and it is shown that this decision method (Truncation) leads to a limited — as opposed to wholesale — violation of evaluative compositionality. The paper then argues that the truncation method yields solutions to the problems posed by the Pasadena game and its relatives that are both attractive in themselves and superior to those yielded by alternative proposals in the literature. (shrink)

The rational price of the Pasadena and Altadena games, introduced by Nover and Hájek (2004 ), has been the subject of considerable discussion. Easwaran (2008 ) has suggested that weak expectations — the value to which the average payoffs converge in probability — can give the rational price of such games. We argue against the normative force of weak expectations in the standard framework. Furthermore, we propose to replace this framework by a bounded utility perspective: this shift renders the problem (...) more realistic and accounts for the role of weak expectations. In particular, we demonstrate that in a bounded utility framework, all agents, even if they have different value functions and disagree on the price of an individual game, will finally agree on the rational price of a repeated, averaged game. Thus, we explain the intuitive appeal of weak expectations, while avoiding both trivialization of the original paradox and the drawbacks of previous approaches. (shrink)

Fine has shown that assigning any value to the Pasadena game is consistent with a certain standard set of axioms for decision theory. However, I suggest that it might be reasonable to believe that the value of an individual game is constrained by the long-run payout of repeated plays of the game. Although there is no value that repeated plays of the Pasadena game converges to in the standard strong sense, I show that there is a weaker sort of convergence (...) it exhibits, and use this to define a notion of ‘weak expectation’ that can give values to the Pasadena game and many others, though not to all games that fail to have a strong expectation in the standard sense. CiteULike Connotea Del.icio.us What's this? (shrink)

By recourse to the fundamentals of preference orderings and their numerical representations through linear utility, we address certain questions raised in Nover and Hájek 2004, Hájek and Nover 2006, and Colyvan 2006. In brief, the Pasadena and Altadena games are well-defined and can be assigned any finite utility values while remaining consistent with preferences between those games having well-defined finite expected value. This is also true for the St Petersburg game. Furthermore, the dominance claimed for the Altadena game over the (...) Pasadena game, and that would have been claimed for the St Petersburg game over the Altadena, can be contradicted without fear of inconsistency with the axioms of utility theory. However, insistence upon dominance can be made to yield a contradiction of the Archimedean axiom of utility theory. CiteULike Connotea Del.icio.us What's this? (shrink)

We address the question of how finitely additive moral value theories (such as utilitarianism) should rank worlds when there are an infinite number of locations of value (people, times, etc.). In the finite case, finitely additive theories satisfy both Weak Pareto and a strong anonymity condition. In the infinite case, however, these two conditions are incompatible, and thus a question arises as to which of these two conditions should be rejected. In a recent contribution, Hamkins and Montero (2000) have argued (...) in favor of an anonymity-like isomorphism principle and against Weak Pareto. After casting doubt on their criticism of Weak Pareto, we show how it, in combination with certain other plausible principles, generates a plausible and fairly strong principle for the infinite case. We further show that where locations are the same in all worlds, but have no natural order, this principle turns out to be equivalent to a strengthening of a principle defended by Vallentyne and Kagan (1997), and also to a weakened version of the catching-up criterion developed by Atsumi (1965) and by von Weizsäcker (1965). Footnotes1 For valuable comments, we would like to thank Marc Fleurbaey, Bart Capéau, Joel Hamkins, Barbara Montero, Tim Mulgan, and two anonymous referees for this journal. (shrink)

We introduce a St. Petersburg-like game, which we call the ‘Pasadena game’, in which we toss a coin until it lands heads for the first time. Your pay-offs grow without bound, and alternate in sign (rewards alternate with penalties). The expectation of the game is a conditionally convergent series. As such, its terms can be rearranged to yield any sum whatsoever, including positive infinity and negative infinity. Thus, we can apparently make the game seem as desirable or undesirable as we (...) want, simply by reordering the pay-off table, yet the game remains unchanged throughout. Formally speaking, the expectation does not exist; but we contend that this presents a serious problem for decision theory, since it goes silent when we want it to speak. We argue that the Pasadena game is more paradoxical than the St. Petersburg game in several respects. We give a brief review of the relevant mathematics of infinite series. We then consider and rebut a number of replies to our paradox: that there is a privileged ordering to the expectation series; that decision theory should be restricted to finite state spaces; and that it should be restricted to bounded utility functions. We conclude that the paradox remains live. (shrink)

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)

We show that it is not possible to extend the ranking of one-stage lotteries based on their weak-expectation to a reflexive and transitive relation on the collection of one- and two-stage lotteries that satisfies two basic axioms, the minimal value axiom and the reduction axiom. We propose an extension that satisfies only the first axiom. This ranking takes payoffs, their probabilities, and the tree structure into account.

The Pasadena game invented by Nover and Hájek raises a number of challenges for decision theory. The basic problem is how the game should be evaluated: it has no expectation and hence no well-defined value. Easwaran has shown that the Pasadena game does have a weak expectation, raising the possibility that we can eliminate the value gap by requiring agents to value gambles at their weak expectations. In this paper, I first prove a negative result: there are gambles like the (...) Pasadena game that do not even have a weak expectation. Hence, problematic value gaps remain even if decision theory is extended to take in weak expectations. There is a further challenge: the existence of a ‘value gap’ in the Pasadena game seems to make decision theory inapplicable in a number of cases where the right choice is obvious. The positive contribution of the paper is a theory of ‘relative utilities’, an extension of decision theory that lets us make comparative judgements even among gambles that have no well-defined value. (shrink)

Games such as the St. Petersburg game present serious problems for decision theory.1 The St. Petersburg game invokes an unbounded utility function to produce an infinite expectation for playing the game. The problem is usually presented as a clash between decision theory and intuition: most people are not prepared to pay a large finite sum to buy into this game, yet this is precisely what decision theory suggests we ought to do. But there is another problem associated with the St. (...) Petersburg game. The problem is that standard decision theory counsels us to be indifferent between any two actions that have infinite expected utility. So, for example, consider the decision problem of whether to play the St. Petersburg game or a game where every payoff is $1 higher. Let’s call this second game the Petrograd game (it’s the same as St. Petersburg but with a bit of twentieth century inflation). Standard decision theory is indifferent between these two options. Indeed, it might be argued that any intuition that the Petrograd game is better than the St. Petersburg game is a result of misguided and na¨ıve intuitions about infinity.2 But this argument against the intuition in question is misguided. The Petrograd game is clearly better than the St. Petersburg game. And what is more, there is no confusion about infinity involved in thinking this. When the series of coin tosses comes to an end (and it comes to an end with probability 1), no matter how many tails precede the first head, the payoff for the Petrograd game is one dollar higher than the St. Petersburg game. Whatever the outcome, you are better off playing the Petrograd game. Infinity has nothing to do with it. Indeed, a straightforward application of dominance reasoning backs up this line of reasoning.3 Standard decision theory. (shrink)

This paper evaluates a recent method proposed by Jeremy Gwiazda for calculating the value of gambles that fail to have expected values in the standard sense. I show that Gwiazda’s method fails to give answers for many gambles that do have standardly defined expected values. However, a slight modification of his method (based on the mathematical notion of the ‘Cauchy principal value’ of an integral), is in fact a proper extension of both his method and the method of ‘weak expectations’. (...) I show that this method gives an appropriate value when the ‘tails’ of the gambles that are eliminated in the truncation are ‘stable’, but that the value is not appropriate when the tails are not stable. I do not attempt to give an argument for the use of this method, but just note that it is more general than Gwiazda’s method, and is mathematically quite natural. (shrink)

In some games, the products of the probabilities times the payouts result in a series that is conditionally convergent, which means that the sum can vary based on the order in which the products are summed. The purpose of this paper is to address the question: How should such games be valued? We first show that, contrary to widespread belief, summing in the order determined by the mechanism of the game does not lead to the correct value. We then consider (...) other attempts to value such games. We suggest that games with conditionally convergent series are properly valued by summing the products in increasing order of the absolute values of the game’s payouts. (shrink)

In our 2004, we introduced two games in the spirit of the St Petersburg game, the Pasadena and Altadena games. As these latter games lack an expectation, we argued that they pose a paradox for decision theory. Terrence Fine has shown that any finite valuations for the Pasadena, Altadena, and St Petersburg games are consistent with the standard decision-theoretic axioms. In particular, one can value the Pasadena game above the other two, a result that conflicts with both our intuitions and (...) dominance reasoning. We argue that this result, far from resolving the Pasadena paradox, should serve as a reductio of the standard theory, and we consequently make a plea for new axioms for a revised theory. We also discuss a proposal by Kenny Easwaran that a gamble should be valued according to its 'weak expectation', a generalization of the usual notion of expectation. (shrink)

This paper is a response to Paul Bartha’s ‘Making Do Without Expectations’. We provide an assessment of the strengths and limitations of two notable extensions of standard decision theory: relative expectation theory and Paul Bartha’s relative utility theory. These extensions are designed to provide intuitive answers to some well-known problems in decision theory involving gaps in expectations. We argue that both RET and RUT go some way towards providing solutions to the problems in question but neither extension solves all the (...) relevant problems. (shrink)

In this paper I add a new twist to Colyvan's version of the Petrograd paradox.