Several axiom systems for preference among acts lead to a unique probability and a state-independent utility such that acts are ranked according to their expected utilities. These axioms have been used as a foundation for Bayesian decision theory and subjective probability calculus. In this article we note that the uniqueness of the probability is relative to the choice of whatcounts as a constant outcome. Although it is sometimes clear what should be considered constant, in many cases there are (...) several possible choices. Each choice can lead to a different "unique" probability and utility. By focusing attention on statedependent utilities, we determine conditions under which a truly unique probability and utility can be determined from an agent's expressed preferences among acts. Suppose that an agent's preference can be represented in terms of a probability P and a utility U.That is, the agent prefers one act to another iff the expected utility of that act is higher than that of the other. There are many other equivalent representations in terms of probabilities Q, which are mutually absolutely continuous with P, and state-dependent utilities V, which differ from U by possibly different positive affine transformations in each state of nature. We describe an example in which there are two different but equivalent state-independent utility representations for the same preference structure. They differ in which acts count as constants. The acts involve receiving different amounts of one or the other of two currencies, and the states are different exchange rates between the currencies. It is easy to see how it would not be possible for constant amounts of both currencies to have simultaneously constant values across the differentstates. Savage (1954, sec. 5.5) discovered a situation in which two seemingly equivalent preference structures are represented by different pairs of probability and utility. He attributed the phenomenon to the construction of a "small world." We show that the small world problem is just another example of two different, but equivalent, representations treating different actsas constants. Finally, we prove a theorem (similar to one of Karni 1985) that shows how to elicit a unique state-dependent utility and does not assume that there are prizes with constant value. To do this, we define a new hypothetical kind of act in which both the prize to be awarded and the state of nature are determined by an auxiliary experiment. (shrink)

State-dependent utility is a problem for the behavioural branch of decision theory under uncertainty. It questions the very possibility that beliefs be revealed by choice data. According to the current literature, all models of beliefs are equally exposed to the problem. Moreover, the problem is solvable only when the decision-maker can influence the resolution of uncertainty. This article gives grounds to reject these two views. The various models of beliefs can be shown to be unequally exposed to (...) the problem of state-dependent utility. The problem can be argued to be solved even when the decision-maker has no influence over the resolution of uncertainty. The implications of such reappraisal for a philosophical appreciation of the revealed preference methodology are discussed. (shrink)

In this paper, I investigate the betting behavior of a decision-maker who can influence the likelihood of the events upon which she is betting. In decision theory, this is best known as a situation of moral hazard. Focusing on a particularly simple case, I sketch the first systematic analysis of moral hazard in the canonical Savage framework. From the results of this analysis, I draw two philosophical conclusions. First, from an observational and a descriptive point of view, there need to (...) be no incompatibility between moral hazard and the Savage framework. This qualifies the incompatibility view, that is ubiquitous in decision theory. Second, in general, moral hazard is not sufficient to overcome the challenges posed by state-dependent utility to the behavioral identification of beliefs. This qualifies the sufficiency view, that is influential in decision theory. These two philosophical conclusions are the main contributions of my paper. (shrink)

This note is a generalization and improved interpretation of the main result of Karni and Schmeidler. A decision-maker is supposed to possess a preference relation on acts and another preference relation on state-prize lotteries, both of which are assumed to satisfy the von Neumann–Morgenstern axioms. In addition, the two preference relations restricted to a state of nature are assumed to agree. We show that these axioms are necessary and sufficient for the existence of subjective expected utility over (...) acts with state-dependent utility functions and a subjective probability measure. This subjective probability measure is unique when conditioned on the set of states of nature in which not all the prizes are equally desirable. (shrink)

Savage's framework of subjective preference among acts provides a paradigmatic derivation of rational subjective probabilities within a more general theory of rational decisions. The system is based on a set of possible states of the world, and on acts, which are functions that assign to each state a consequence€. The representation theorem states that the given preference between acts is determined by their expected utilities, based on uniquely determined probabilities (assigned to sets of states), and numeric utilities assigned to (...) consequences. Savage's derivation, however, is based on a highly problematic well-known assumption not included among his postulates: for any consequence of an act in some state, there is a "constant act" which has that consequence in all states. This ability to transfer consequences from state to state is, in many cases, miraculous -- including simple scenarios suggested by Savage as natural cases for applying his theory. We propose a simplification of the system, which yields the representation theorem without the constant act assumption. We need only postulates P1-P6. This is done at the cost of reducing the set of acts included in the setup. The reduction excludes certain theoretical infinitary scenarios, but includes the scenarios that should be handled by a system that models human decisions. (shrink)

This article is concerned with the representation of preferences which do not satisfy the ordinary axioms for state-independent utilities. After suggesting reasons for not being satisfied with solutions involving state-dependent utilities, an alternative representation shall be proposed involving state-independent utilities and a situation-dependent factor. The latter captures the interdependencies between states and consequences. Two sets of axioms are proposed, each permitting the derivation of subjective probabilities, state-independent utilities, and a situation-dependent factor, and each (...) operating in a different framework. The first framework involves the concept of a decision situation—consisting of a set of states, a set of consequences and a preference relation on acts; the probabilities, utilities and situation-dependent factor are elicited by referring to other, appropriate decision situations. The second framework, which is technically related, operates in a fixed decision situation; particular “subsituations” are employed in the derivation of the representation. Possible interpretations of the situation-dependent factor and the notion of situation are discussed. (shrink)

This commentary considers Merker's mesodiencephalic proposal in relation to quantitative measures of neural dynamics suggested to be relevant to consciousness. I suggest that even if critical neural mechanisms turn out to be subcortical, the functional utility of consciousness will depend on the rich conscious contents generated by continuous interaction of such mechanisms with a thalamocortical envelope. (Published Online May 1 2007).

Consider a subjective expected utility preference relation. It is usually held that the representations which this relation admits differ only in one respect, namely, the possible scales for the measurement of utility. In this paper, I discuss the fact that there are, metaphorically speaking, two additional dimensions along which infinitely many more admissible representations can be found. The first additional dimension is that of state-dependence. The second—and, in this context, much lesser-known—additional dimension is that of act-dependence. The (...) simplest implication of their usually neglected existence is that the standard axiomatizations of subjective expected utility fail to provide the measurement of subjective probability with satisfactory behavioral foundations. (shrink)

We provide welfarist evaluations of decision rules for federations of states and consider models, under which the interests of people from different states are stochastically dependent. We concentrate on two welfarist standards; they require that the expected utility for the federation be maximized or that the expected utilities for people from different states be equal. We discuss an analytic result that characterizes the decision rule with maximum expected utility, set up a class of models that display interstate (...) dependencies and run simulations for different dependency scenarios in the European Union. We find that, under positive correlations, the welfare distribution tends to be less sensitive to the choice of the decision rule, whereas it can be important under negative correlations. The results that Beisbart and Bovens (SCW 29, p. 581, 2007) have found for two types of models without interstate dependencies are relatively stable. There are exceptions, though, under which the way the welfare distribution is shaped by a decision rule is significantly affected by dependencies. (shrink)

This paper examines the preference-based approach to the identification of beliefs. It focuses on the main problem to which this approach is exposed, namely that of state-dependent utility. First, the problem is illustrated in full detail. Four types of state-dependent utility issues are distinguished. Second, a comprehensive strategy for identifying beliefs under state-dependent utility is presented and discussed. For the problem to be solved following this strategy, however, preferences need to extend (...) beyond choices. We claim that this a necessary feature of any complete solution to the problem of state-dependent utility. We also argue that this is the main conceptual lesson to draw from it. We show that this lesson is of interest to both economists and philosophers. (shrink)

We give two social aggregation theorems under conditions of risk, one for constant population cases, the other an extension to variable populations. Intra and interpersonal welfare comparisons are encoded in a single ‘individual preorder’. The theorems give axioms that uniquely determine a social preorder in terms of this individual preorder. The social preorders described by these theorems have features that may be considered characteristic of Harsanyi-style utilitarianism, such as indifference to ex ante and ex post equality. However, the theorems are (...) also consistent with the rejection of all of the expected utility axioms, completeness, continuity, and independence, at both the individual and social levels. In that sense, expected utility is inessential to Harsanyi-style utilitarianism. In fact, the variable population theorem imposes only a mild constraint on the individual preorder, while the constant population theorem imposes no constraint at all. We then derive further results under the assumption of our basic axioms. First, the individual preorder satisfies the main expected utility axiom of strong independence if and only if the social preorder has a vector-valued expected total utility representation, covering Harsanyi’s utilitarian theorem as a special case. Second, stronger utilitarian-friendly assumptions, like Pareto or strong separability, are essentially equivalent to strong independence. Third, if the individual preorder satisfies a ‘local expected utility’ condition popular in non-expected utility theory, then the social preorder has a ‘local expected total utility’ representation. Fourth, a wide range of non-expected utility theories nevertheless lead to social preorders of outcomes that have been seen as canonically egalitarian, such as rank-dependent social preorders. Although our aggregation theorems are stated under conditions of risk, they are valid in more general frameworks for representing uncertainty or ambiguity. (shrink)

According to Bayesian epistemology, the epistemically rational agent updates her beliefs by conditionalization: that is, her posterior subjective probability after taking account of evidence X, pnew, is to be set equal to her prior conditional probability pold(·|X). Bayesians can be challenged to provide a justification for their claim that conditionalization is recommended by rationality—whence the normative force of the injunction to conditionalize? There are several existing justifications for conditionalization, but none directly addresses the idea that conditionalization will be epistemically rational (...) if and only if it can reasonably be expected to lead to epistemically good outcomes. We apply the approach of cognitive decision theory to provide a justification for conditionalization using precisely that idea. We assign epistemic utility functions to epistemically rational agents; an agent’s epistemic utility is to depend both upon the actual state of the world and on the agent’s credence distribution over possible states. We prove that, under independently motivated conditions, conditionalization is the unique updating rule that maximizes expected epistemic utility. (shrink)

Sometimes conducting an experiment to ascertain the state of a system changes the state of the system being measured. Kahneman & Tversky modelled this effect with ‘support theory’. Quantum physics models this effect with probability amplitude mechanics. As this paper shows, probability amplitude mechanics is similar to support theory. Additionally, Viscusi's proposed generalized expected utility model has an analogy in quantum mechanics.

This work is not a specific assessment of Utility of Religion by John Stuart Mill, but a defence of what I think is a utilitarian, but not millian, view on the problem that work states, the question of the utility of religion in contemporary societies. I construct that view from neohumeanism more than from millian positions, notwithstanding, I postulate that view as a genuine utilitarian one. -/- Every cultural tradition makes a different approach to ethical and political theories. (...) Spanish and Ibero-American utilitarians make precisely it with Classical Utilitarianism. -/- From that point of view, Ibero-American people identifies utilitarianism with radical and enlightened tradition linked with the reform that through XVIIIth and XIXth centuries tried to undermine the foundations of conservative society in our nations. -/- This aim was not achieved, at least not completely; because of that, the pursuit of Utilitarianism remains opened between us. In the end, I will argue that Spanish and Ibero-American utilitarians connect utilitarianism with philosophical and political radicalism, and inside that Hispanic utilitarianism, plays an important role the criticism of social and political functions of Religion. -/- Maybe, part of the future of Utilitarianism in our cultural context depends on a return of the Theory to its radical roots, also in religious subjects. (shrink)

This paper presents a personal view of the interaction between the analysis of choice under uncertainty and the analysis of production under uncertainty. Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under uncertainty. This interest led to the development of generalized models including rank-dependent expected utility theory. In turn, the development of generalized expected utility models raised the question (...) of whether such models could be used in the analysis of applied problems such as those involving production under uncertainty. Finally, the revival of the state-contingent approach led to the recognition of a fundamental duality between choice problems and production problems. (shrink)

In order to accommodate empirically observed violations of the independence axiom of expected utility theory Becker and Sarin (1987) proposed their model of lottery dependent utility in which the utility of an outcome may depend on the lottery being evaluated. Although this dependence is intuitively very appealing and provides a simple functional form of the resulting decision criterion, lottery dependent utility has been nearly completely neglected in the recent literature on decision making under risk. (...) The goal of this paper is to revive the lottery dependent utility model. Therefore, we derive first a sound axiomatic foundation of lottery dependent utility. Secondly, we develop a discontinuous variant of the model which can accommodate boundary effects and may lead to a lexicographic non-expected utility model. Both analyses are accompanied by considering some functional specifications which are in accordance with recent experimental results and may have significant applications in business and management science. (shrink)

Neoclassical economic theory assurnes that people pursue utility maximization within an obiective framework, evident to all, that serves as the basis for the interaction. Agents are assumed to be detached observers who see the situation as it is in obiective reality. It is argued in this article that there is no obiective ground for interaction that exists apart from the understanding of economic agents. Agents have orientations that change over time depending on the way that the situation is currently (...) understood. Depth of understanding and the extent of common ground depend on the quality of attention and the will to openness and honesty. Efforts to maintain connections with others make possible mutual understanding and visions of the common good that enable the coordinated pursuit of desired states of the world. (shrink)

A recent hypothesis in empirical brain research on language is that the fundamental difference between animal and human communication systems is captured by the distinction between finite-state and more complex phrase-structure grammars, such as context-free and context-sensitive grammars. However, the relevance of this distinction for the study of language as a neurobiological system has been questioned and it has been suggested that a more relevant and partly analogous distinction is that between non-adjacent and adjacent dependencies. Online memory resources are (...) central to the processing of non-adjacent dependencies as information has to be maintained across intervening material. One proposal is that an external memory device in the form of a limited push-down stack is used to process non-adjacent dependencies. We tested this hypothesis in an artificial grammar learning paradigm where subjects acquired non-adjacent dependencies implicitly. Generally, we found no qualitative differences between the acquisition of non-adjacent dependencies and adjacent dependencies. This suggests that although the acquisition of non-adjacent dependencies requires more exposure to the acquisition material, it utilizes the same mechanisms used for acquiring adjacent dependencies. We challenge the push-down stack model further by testing its processing predictions for nested and crossed multiple non-adjacent dependencies. The push-down stack model is partly supported by the results, and we suggest that stack-like properties are some among many natural properties characterizing the underlying neurophysiological mechanisms that implement the online memory resources used in language and structured sequence processing. (shrink)

This paper (first published under the same title in Journal of Mathematical Economics, 29, 1998, p. 331-361) is a sequel to "Consistent Bayesian Aggregation", Journal of Economic Theory, 66, 1995, p. 313-351, by the same author. Both papers examine mathematically whether the the following assumptions are compatible: the individuals and the group both form their preferences according to Subjective Expected Utility (SEU) theory, and the preferences of the group satisfy the Pareto principle with respect to those of the individuals. (...) While the 1995 paper explored these assumptions in the axiomatic context of Savage's (1954-1972) SEU theory, the present paper explores them in the context of Anscombe and Aumann's (1963) alternative SEU theory. We first show that the problematic assumptions become compatible when the Anscombe-Aumann utility functions are state-dependent and no subjective probabilities are elicited. Then we show that the problematic assumptions become incompatible when the Anscombe-Aumann utility functions are state-dependent, like before, but subjective probabilities are elicited using a relevant technical scheme. This last result reinstates the impossibilities proved by the 1995 paper, and thus shows them to be robust with respect to the choice of the SEU axiomatic framework. The technical scheme used for the elicitation of subjective probabilities is that of Karni, Schmeidler and Vind (1983). (shrink)

The purpose of this paper is to advance an analytical approach that systematically seeks to identify social mechanisms that generate and explain observed associations between events. In spite of recent contributions to animate the search for explanatory mechanisms, most of these monographs extol the theoretical while eschewing its application to applied research. This study emphasizes a systematic approach to identifying causal processes derived from critical realism by applying a realist template to research projects that claim to have identified causal mechanisms. (...) A critical realist framework serves as an independent standard in order to evaluate whether two proposed mechanisms, identified in applied research, adequately explain the phenomenon under study. The Disciplinary Revolution and The Familial State are used as sources of data since each work attempts to explain the emergence of the modern Dutch state yet by differing causal mechanisms. Realism’s approach to understanding causation emphasizes structural analysis which depends on abstract conceptualization in order to identify ontologically constituent properties, utilizes abductive and retroductive logic, and an emic interpretation of historical events. Findings suggest that research that intuitively emphasizes realist principles is more likely to identify causal processes. (shrink)

The possibility to interpret expected and nonexpected utility theories in purely probabilistic terms has been recently investigated. Such interpretation proposes as guideline for the Decision Maker the comparison of random variables through their probability to outperform a stochastic benchmark. We apply this type of analysis to the model of Becker and Sarin, showing that their utility functional may be seen as the probability that an opportune random variable, depending on the one to be evaluated, does not outperform a (...) non-random benchmark. Further, the consequent choice criterion is equivalent to a sort of probability of ruin. Possible interpretations and financial examples are discussed. (shrink)

This paper investigates the impact of changing science policy doctrines on the development of an academic field, working life research. Working life research is an interdisciplinary field of study in which researchers and stakeholders collaborated to produce relevant knowledge. The development of the field, we argue, was both facilitated and justified by the, at the time dominant, science policy orthodoxy in Sweden, sector research. Sector research science policy doctrine favoured stakeholder-driven research agendas in the fields relevant to the sector. This (...) approach to agenda setting was highly contested by Swedish universities and left scientists vulnerable to the fallout from any conflicts arising among the stakeholder groupings that were part of the governance arrangement. Our case shows that working life research was in part a victim of the struggle between science and policy over who sets the agenda for science in Sweden. In this struggle, each side chose to use ‘scientific quality’ as a proxy for furth ing its respective interests and visions for how science should be governed. The paper argues that this case is of interest to the continued elaboration of the Mode 2 thesis and the debate about ‘relevant science’. We find that the close association with stakeholders and the concomitant dependence it created left working life research unable to defend itself against its critics and that this state of affairs was particularly problematic for social science research on working life. (shrink)

Thinking is known to be state dependent but a systematic study of how thinking in dreams differs from thinking while awake has not been done. The study consisted of analyzing the dream reports of 26 subjects who, in addition to providing dream reports also provided answers to questions about their thinking within the dream. Our hypothesis was that thinking in dreams is not monolithic but has two distinct components, one that is similar to wake-state cognition, and another (...) that is fundamentally different. We found that cognition within a dream scenario was similar to that of wake-state cognition, but that thinking about the scenario itself was deficient and very different than wake-state thinking. (shrink)

This commentary argues that (1) arousal is not sufficient to induce LTP in the hippocampus, (2) learning can profoundly modulate synaptic plasticity in a state-dependent manner without affecting baseline synaptic efficacy, and (3) unilateral, synapse-specific LTP induction triggers an interhippocampal communication manifested as bilateral increases in gene expression at multiple sites in the hippocampal network.

Luce and Narens (Journal of Mathematical Psychology, 29:1–72, 1985) showed that rank-dependent utility (RDU) is the most general interval scale utility model for binary lotteries. It can be easily established that this result cannot be generalized to lotteries with more than two outcomes. This article suggests several additional conditions to ensure RDU as the only utility model with the desired property of interval scalability in the general case. The related axiomatizations of some special cases of RDU (...) of independent interest (the quantile utility, expected utility, and Yaari’s dual expected utility) are also given. (shrink)

Writing in the foreword to Allan Bloom's The Closing of the American Mind and speaking of his upbringing in Chicago between the wars Saul Bellow attests that …as a Midwesterner, the son of immigrant parents, I recognized at an early stage that I was called upon to decide for myself to what extent my Jewish origins, my surroundings [‘the accidental circumstances of Chicago’], my schooling, were to be allowed to determine the course of my life. I did not intend to (...) be wholly dependent upon history and culture. Full dependency must mean that I was done for. The commonest teaching of the civilized world in our time can be stated simply: ‘Tell me where you come from and I'll tell you what you are’. (shrink)

Matrix population models provide a natural tool to analyse state-dependent life-history strategies. Reproductive value and the intrinsic rate of natural increase under a strategy, and the optimal life-history strategy can all be easily characterised using projection matrices. The resultant formulae, however, are not directly comparable with the corresponding formulae for age structured populations such as Lotka's equations and Fisher's formula for reproductive value. This is because formulae involving projection matrices lose track of what happens to an individual over (...) its lifetime and are only concerned with expected numbers of descendants one time step in the future. In contrast the usual age-dependent formulae explicitly followed a single individual through from birth to death.In this paper I show how the state-dependent formulae can be rewritten to be directly comparable with the standard age-structured formulae. Although the formulae are intuitively obvious the decomposition into current and future reproductive success differs from that previously given and is, I suggest, a more natural definition. The derivation of appropriate equations for optimal life-histories relies on results from dynamic programming theory; and is much more general and easier than previous derivations. (shrink)

Based on the Lotka–Volterra system, a pest-natural enemy model with nonlinear feedback control as well as nonlinear action threshold is introduced. The model characterizes the implementation of comprehensive prevention and control measures when the pest density reaches the nonlinear action threshold level depending on the pest density and its change rate. The mortality rate of the pest is a saturation function that strictly depends on their density while the release of natural enemies is also a nonlinear pulse term depending on (...) the density of real-time natural enemies. The exact impulsive and phase sets are given. The definition and properties of the Poincaré map corresponding to the pulse points on the phase set are provided. We investigate the existence and stability of boundary and interior order-1 periodic solution. The theoretical analysis developed in the present paper combined with nonlinear controlling measures as well as nonlinear action threshold methods and techniques laid the foundation for the establishment and analysis of other state-dependent feedback control models. (shrink)

Dreaming consciousness can be quite different from waking consciousness and this difference must depend upon the underlying neurobiology. Our approach is to infer the underlying brain basis for this difference by studying dream reports and comparing them with waking. In this study we investigated mentation during dreaming by asking subjects to provide us with dream reports and by asking them to create a dream log. In the dream log, the subjects recorded all implausibility, illogicality or inappropriateness of character during the (...) dream narrative when compared to the character’s real-life waking counterpart. Thus, the dream acted as its own control in comparing waking and dreaming mentation. (shrink)

The three introductory questions posed by Hobson et al. point toward further investigations of cellular, circuit, and systems mechanisms involved in cognitive function that include the effect of CNS-state related modulatory systems on these mechanisms. [Hobson et al.].

Ainslie's target article provides a map of distinct mechanisms relevant to self-control, potentially providing needed precision to the field. He also breaks new ground in characterizing the symbiotic relationship between suppression and resolve. In this commentary, I argue that one behaviorism-based feature of his framework, present-state independence, is unjustified and unnecessary for the broader claims of the theory.

The topic of this thesis is axiological uncertainty – the question of how you should evaluate your options if you are uncertain about which axiology is true. As an answer, I defend Expected Value Maximisation (EVM), the view that one option is better than another if and only if it has the greater expected value across axiologies. More precisely, I explore the axiomatic foundations of this view. I employ results from state-dependent utility theory, extend them in various (...) ways and interpret them accordingly, and thus provide axiomatisations of EVM as a theory of axiological uncertainty. (shrink)

The Expected Shortfall or Conditional Value-at-Risk (CVaR) has been playing the role of main risk measure in the recent years and paving the way for an enormous number of applications in risk management due to its very intuitive form and important coherence properties. This work aims to explore this measure as a probability-dependent utility functional, introducing an alternative view point for its Choquet Expected Utility representation. Within this point of view, its main preference properties will be characterized (...) and its utility representation provided through local utilities with an explicit dependence on the assessed revenue’s distribution (quantile) function. Then, an intuitive interpretation for the related probability dependence and the piecewise form of such utility will be introduced on an investment pricing context, in which a CVaR maximizer agent will behave in a relativistic way based on his previous estimates of the probability function. Finally, such functional will be extended to incorporate a larger range of risk-averse attitudes and its main properties and implications will be illustrated through examples, such as the so-called Allais Paradox. (shrink)