Topics in Decision Theory, Misc

The essay presents a novel counterexample to Causal Decision Theory (CDT). Its interest is that it generates a case in which CDT violates the very principles that motivated it in the first place. The essay argues that the objection applies to all extant formulations of CDT and that the only way out for that theory is a modification of it that entails incompatibilism. The essay invites the reader to find this consequence of CDT a reason to reject it.

The best justification of time-discounting is roughly that it is rational to care less about your more distant future because there is less of you around to have it. I argue that the standard version of this argument, which treats both psychological continuity and psychological connectedness as reasons to care about your future, can only rationalize an irrational—because exploitable—form of future discounting.

This article elaborates on foundational issues in the social sciences and their impact on the contemporary theory of belief revision. Recent work in the foundations of economics has focused on the role external social norms play in choice. Amartya Sen has argued in [Sen93] that the traditional rationalizability approach used in the theory of rational choice has serious problems accommodating the role of social norms. Sen's more recent work [Sen96, Sen97] proposes how one might represent social norms in the theory (...) of choice, and in a very recent article [BS07] Walter Bossert and Kotaro Suzumura develop Sen's proposal, offering an extension of the classical theory of choice that is capable of dealing with social norms. The first part of this article offers an alternative functional characterization of the extended notion of rationality employed by Bossert and Suzumura in [BS07]. This characterization, unlike the one offered in [BS07], represents a norm-sensitive notion of rationality in terms of a pure functional constraint unmediated by a notion of revealed preference (something that is crucial for the application developed in the second part of this article). This functional characterization is formulated for general domains (as is Bossert and Suzumura's characterization) and is therefore empirically more applicable than usual characterizations of rationality. Interestingly, the functional constraint we propose is a variant of a condition first entertained in [AGM85] by Carlos Alchourrón, Peter Gärdenfors and David Makinson in the area of belief change. The second part of this article applies the theory developed in the first part to the realm of belief change. We first point out that social norms can be invoked to concoct counterexamples against some postulates of belief change (like postulate (*7)) that are necessary for belief change to be relational. These examples constitute the epistemological counterpart of Sen's counterexamples against condition α in rational choice (as a matter of fact, Rott has showed in [Rot01] that condition and postulate (*7) are mutually mappable). These examples are variants of examples Rott has recently presented in [Rot04]. One of our main goals in this article consists in applying the theory developed in the first part to develop a theory of norm-inclusive belief change that circumvents the counterexamples. We offer a new axiomatization for belief change and we furnish correspondence results relating constraints of rational choice to postulates of belief change. (shrink)

Moral puzzles about actions which bring about very small or what are said to be imperceptible harms or benefits for each of a large number of people are well known. Less well known is an argument by Warren Quinn that standard theories of rationality can lead an agent to end up torturing himself or herself in a completely foreseeable way, and that this shows that standard theories of rationality need to be revised. We show where Quinn's argument goes wrong, and (...) apply this to the moral puzzles. (shrink)

Decision theorists generally object to “honoring sunk costs” – that is, treating the fact that some cost has been incurred in the past as a reason for action, apart from the consideration of expected consequences. This paper critiques the doctrine that sunk costs should never be honored on three levels. As background, the rationale for the doctrine is explained. Then it is shown that if it is always irrational to honor sunk costs, then other common and uncontroversial practices are also (...) irrational. Second, it is argued that there is no satisfactory way to make a distinction between the two kinds of cases. Third, a proposal is developed which would explain how it could be rational, under certain circumstances, to honor sunk costs. (shrink)

Experimental results on the Ellsberg paradox typically reveal behavior that is commonly interpreted as ambiguity aversion. The experiments reported in the current paper find the objective probabilities for drawing a red ball that make subjects indifferent between various risky and uncertain Ellsberg bets. They allow us to examine the predictive power of alternative principles of choice under uncertainty, including the objective maximin and Hurwicz criteria, the sure-thing principle, and the principle of insufficient reason. Contrary to our expectations, the principle of (...) insufficient reason performed substantially better than rival theories in our experiment, with ambiguity aversion appearing only as a secondary phenomenon. (shrink)

Adapting a definition introduced by Milgrom (1981) we say that a signal about the environment is good news relative to some initial beliefs if the posterior beliefs dominate the initial beliefs in the sense of first-order stochastic dominance (the assumption being that higher values of the parameter representing the environment mean better environments). We give an example where good news leads to the adoption of a more pessimistic course of action (we say that action a, reveals greater pessimism than action (...) a„ if it gives higher payoff in bad environments and lower payoff in good environments). We then give sufficient conditions for a signal not to induce a more pessimistic choice of action. (shrink)

It is well known that interval orders are particularly interesting in decision theory, since they are reflexive, complete and nontransitive binary relations which may be fully represented by means of two real-valued functions. In this paper, we discuss the existence of a pair of nonnegative, positively homogeneous and semicontinuous real-valued functionals representing an interval order on a real cone in a topological vector space. We recover as a particular case a result concerning the existence of a nonnegative, positively homogeneous and (...) continuous utility functional for a complete preorder on a real cone in a topological vector space. (shrink)

Decision theory is concerned with how agents should act when the consequences of their actions are uncertain. The central principle of contemporary decision theory is that the rational choice is the choice that maximizes subjective expected utility. This entry explains what this means, and discusses the philosophical motivations and consequences of the theory. The entry will consider some of the main problems and paradoxes that decision theory faces, and some of responses that can be given. Finally the entry will briefly (...) consider how decision theory applies to choices involving more than one agent. (shrink)

Richard Jeffrey regarded the version of Bayesian decision theory he floated in ‘The Logic of Decision’ and the idea of a probability kinematics—a generalisation of Bayesian conditioning to contexts in which the evidence is ‘uncertain’—as his two most important contributions to philosophy. This paper aims to connect them by developing kinematical models for the study of preference change and practical deliberation. Preference change is treated in a manner analogous to Jeffrey’s handling of belief change: not as mechanical outputs of combinations (...) of intrinsic desires plus information, but as a matter of judgement and of making up one’s mind. In the first section Jeffrey’s probability kinematics is motivated and extended to the treatment of changes in conditional belief. In the second, analogous kinematical models are developed for preference change and in particular belief-induced change that depends on an invariance condition for conditional preference. The two are the brought together in the last section in a tentative model of pratical deliberation. (shrink)

The Desire-as-Belief thesis (DAB) states that any rational person desires a proposition exactly to the degree that she believes or expects the proposition to be good. Many people take David Lewis to have shown the thesis to be inconsistent with Bayesian decision theory. However, as we show, Lewis's argument was based on an Invariance condition that itself is inconsistent with the (standard formulation of the) version of Bayesian decision theory that he assumed in his arguments against DAB. The aim of (...) this paper is to explore what impact the rejection of Invariance has on the DAB thesis. Without assuming Invariance, we first refute all versions of DAB that entail that there are only two levels of goodness. We next consider two theses according to which rational desires are intimately connected to expectations of (multi-levelled) goodness, and show that these are consistent with Bayesian decision theory as long as we assume that the contents of 'value propositions' are not fixed. We explain why this conclusion is independently plausible, and show how to construct such propositions. (shrink)

I have claimed that risk-weighted expected utility maximizers are rational, and that their preferences cannot be captured by expected utility theory. Richard Pettigrew and Rachael Briggs have recently challenged these claims. Both authors argue that only EU-maximizers are rational. In addition, Pettigrew argues that the preferences of REU-maximizers can indeed be captured by EU theory, and Briggs argues that REU-maximizers lose a valuable tool for simplifying their decision problems. I hold that their arguments do not succeed and that my original (...) claims still stand. However, their arguments do highlight some costs of REU theory. (shrink)

Lara Buchak sets out a new account of rational decision-making in the face of risk. She argues that the orthodox view is too narrow, and suggests an alternative, more permissive theory: one that allows individuals to pay attention to the worst-case or best-case scenario, and vindicates the ordinary decision-maker.

Deliberation is often seen as the site of human freedom, but the binding power of rationality seems to imply that deliberation is, in its own way, a deterministic process. If one knows the starting preferences and circumstances of an agent, then, assuming that the agent is rational and that those preferences and circumstances don’t change, one should be in a position to predict what the agent will decide. However, given that an agent could conceivably confront equally attractive alternatives, it is (...) an open question whether rational choice theory can ever eliminate indeterminacy. The clearest support for such a limitation comes from the “Buridan’s ass” scenario, where an agent is confronted with two (or more) equally attractive/unattractive options. Does rationality by itself have the resources needed to prevent such paralysis of action? Those who cannot accept the idea of decisional impotence devise various ways to avoid it: postulating a neutral valence, tipping the utilities, positing sub-personal influences, and bunching the options. I argue that each of these responses is either unwarranted or flawed. All parties to the debate agree that, factually, paralysis of action is not a pervasive phenomenon. This is either because (i) the utilities one assigns to two or more options can never be balanced or because (ii) thanks to some non-rational faculty (say, the will), we would not be stuck even if those utilities were perfectly counterpoised. By looking critically at four untenable responses, I aim to show that (i) is often just a dogma and (ii) is by no means a silly position. (shrink)

Choquet integrals and capacities play a crucial role in modern decision theory. Comonotony is a central concept for these theories because the main property of a Choquet integral is its additivity for comonotone functions. We consider a Choquet integral representation of preferences showing uncertainty aversion (pessimism) and propose axioms on time consistency which yield a candidate for conditional Choquet integrals. An other axiom characterizes the role of comonotony in the use of information. We obtain two conditioning rules for capacities which (...) amount to the well-known Bayes' and Dempster–Schafer's updating rules. We are allowed to interpret both of them as a lack of confidence in information in a dynamic extension of pessimism. (shrink)

Sometimes there are conflicts about what we ought to do according to differing evaluative dimensions, like morality and self-interest. After sketching an interpretation of "ought" claims of all sorts, it is argued that there is no overriding evaluation that authoritatively resolves the conflicts. It is further argued that this is not altogether disappointing.

Let’s say that you regard two things as on a par when you don’t prefer one to other and aren’t indifferent between them. What does rationality require of you when choosing between risky options whose outcomes you regard as on a par? According to Prospectism, you are required to choose the option with the best prospects, where an option’s prospects is a probability-distribution over its potential outcomes. In this paper, I argue that Prospectism violates a dominance principle—which I call The (...) Principle of Predominance—because it sometimes requires you to do something that’s no better than the alternatives and might be worse. I argue that this undermines the strongest argument that’s been given in favor of Prospectism. (shrink)

Bayesian decision theory operates under the fiction that in any decision-making situation the agent is simply given the options from which he is to choose. It thereby sets aside some characteristics of the decision-making situation that are pre-analytically of vital concern to the verdict on the agent's eventual decision. In this paper it is shown that and how these characteristics can be accommodated within a still recognizably Bayesian account of rational agency.

A review of Martin Peterson, _An Introduction to Decision Theory_ (Cambridge University Press, 2009), pp. x + 317.

In recent papers, Zurek [(2005). Probabilities from entanglement, Born's rule pk=|ψk|2 from entanglement. Physical Review A, 71, 052105] has objected to the decision-theoretic approach of Deutsch [(1999) Quantum theory of probability and decisions. Proceedings of the Royal Society of London A, 455, 3129–3137] and Wallace [(2003). Everettian rationality: defending Deutsch's approach to probability in the Everett interpretation. Studies in History and Philosophy of Modern Physics, 34, 415–438] to deriving the Born rule for quantum probabilities on the grounds that it courts (...) circularity. Deutsch and Wallace assume that the many worlds theory is true and that decoherence gives rise to a preferred basis. However, decoherence arguments use the reduced density matrix, which relies upon the partial trace and hence upon the Born rule for its validity. Using the Heisenberg picture and quantum Darwinism—the notion that classical information is quantum information that can proliferate in the environment pioneered in Ollivier et al. [(2004). Objective properties from subjective quantum states: Environment as a witness. Physical Review Letters, 93, 220401 and (2005). Environment as a witness: Selective proliferation of information and emergence of objectivity in a quantum universe. Physical Review A, 72, 042113]—I show that measurement interactions between two systems only create correlations between a specific set of commuting observables of system 1 and a specific set of commuting observables of system 2. This argument picks out a unique basis in which information flows in the correlations between those sets of commuting observables. I then derive the Born rule for both pure and mixed states and answer some other criticisms of the decision theoretic approach to quantum probability. (shrink)

A discussion of L.A. Paul's 'Transformative Experience' from an Author Meets Critics session at the 2015 Pacific APA.

The Everett (many-worlds) interpretation of quantum mechanics faces a prima facie problem concerning quantum probabilities. Research in this area has been fast-paced over the last few years, following a controversial suggestion by David Deutsch that decision theory can solve the problem. This article provides a non-technical introduction to the decision-theoretic program, and a sketch of the current state of the debate.

Difficulties over probability have often been considered fatal to the Everett interpretation of quantum mechanics. Here I argue that the Everettian can have everything she needs from `probability' without recourse to indeterminism, ignorance, primitive identity over time or subjective uncertainty: all she needs is a particular *rationality principle*. The decision-theoretic approach recently developed by Deutsch and Wallace claims to provide just such a principle. But, according to Wallace, decision theory is itself applicable only if the correct attitude to a future (...) Everettian measurement outcome is subjective uncertainty. I argue that subjective uncertainty is not to be had, but I offer an alternative interpretation that enables the Everettian to live without uncertainty: we can justify Everettian decision theory on the basis that an Everettian should *care about* all her future branches. The probabilities appearing in the decision-theoretic representation theorem can then be interpreted as the degrees to which the rational agent cares about each future branch. This reinterpretation, however, reduces the intuitive plausibility of one of the Deutsch -Wallace axioms. (shrink)

Abstract: Don Ross’ Economic Theory and Cognitive Science (2005) provides an elaborate philosophical defense of neoclassical economics. He argues that the central features of neoclassical theory are associated with what he calls the Robbins-Samuelson argument pattern and that it can be reconciled with recent developments in experimental and behavioral economics, as well as contemporary cognitive science. This paper argues that Ross’ Robbins-Samuelson argument pattern is not in the work of either Robbins or Samuelson and in many ways is in conflict (...) with their own versions, and defenses, of neoclassical theory. (shrink)

Abstract: The paper argues that mainstream economics and mainstream philosophy of natural science had much in common during the period 1945-1965. It examines seven common features of the two fields and suggests a number of historical developments that might help explain these similarities. The historical developments include: the Vienna Circle connection, the Samuelson-Harvard-Foundations connection, and the Cold War operations research connection.

This text is a non-technical overview of modern decision theory. It is intended for university students with no previous acquaintance with the subject, and was primarily written for the participants of a course on risk analysis at Uppsala University in 1994.

If the currently available theories of semantic information and utility-expectation are to be applied in a satisfactory way, they must be combined with a message-processing procedure. This paper presents a model of communication within which such a procedure can be defined. In this model the sender's messages arrive over a period of time, the receiver can reject some messages and retain others, the receiver can change his mind in various ways, and the receiver can apply various evaluation functions to a (...) "usable message total". As one example of message-evaluation, a system for evaluating news-value is presented. (shrink)

In many scientific, economic and policy-related problems, pieces of information from different sources have to be aggregated. Typically, the sources are not equally competent. This raises the question of how the relative weights and competences should be related to arrive at an optimal final verdict. Our paper addresses this question under a more realistic perspective of measuring the practical loss implied by an inaccurate verdict.

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)

The paper extends a result in Dutta and Ray's (1989) theory of constrained egalitarianism initiated by relying on the concept of proportionate rather than absolute equality. We apply this framework to redistributive systems in which what the individuals get depends on what they receive or pay qua members of generally overlapping groups. We solve the constrained equalization problem for this class of models. The paper ends up comparing our solution with the alternative solution based on the Shapley value, which has (...) been recommended in some distributive applications. (shrink)

"[This book] proposes new foundations for the Bayesian principle of rational action, and goes on to develop a new logic of desirability and probabtility."—Frederic Schick, _Journal of Philosophy_.

We discuss the cable guy paradox, both as an object of interest in its own right and as something which can be used to illuminate certain issues in the theories of rational choice and belief. We argue that a crucial principle—The Avoid Certain Frustration (ACF) principle—which is used in stating the paradox is false, thus resolving the paradox. We also explain how the paradox gives us new insight into issues related to the Reflection principle. Our general thesis is that principles (...) that base your current opinions on your current opinions about your future opinions need not make reference to the particular times in the future at which you believe you will have those opinions, but they do need to make reference to the particular degrees of belief you believe you will have in the future. (shrink)

We shall defend two theses: (a) if a decision situation exhibits a certain causal structure, then decision theory is in trouble, because the derivation of expected utilities fails; (b) this causal structure in fact obtains in a specific, but very common kind of situation, namely, when the intrinsically evaluated psychological states are in the domain of the utility function. It will be apparent that the problem is but a variant of Joseph Butler's criticism of hedonism. Thus, in a sense, the (...) point of our paper is that modern theorizing about practical deliberation has not dealt seriously with Butler's criticism. (shrink)

It is usually taken as given that consciousness involves superior or more elaborate forms of information processing. Contemporary models equate consciousness with global processing, system complexity, or depth or stability of computation. This is in stark contrast with the powerful philosophical intuition that being conscious is more than just having the ability to compute. I argue that it is also incompatible with current empirical findings. I present a model that is free from the strong assumption that consciousness predicts superior performance. (...) The model is based on Bayesian decision theory, of which signal detection theory is a special case. It reflects the fact that the capacity for perceptual decisions is fundamentally limited by the presence and amount of noise in the system. To optimize performance, one therefore needs to set decision criteria that are based on the behaviour, i.e. the probability distributions, of the internal signals. One important realization is that the knowledge of how our internal signals behave statistically has to be learned over time. Essentially, we are doing statistics on our own brain. This ‘higherorder’ learning, however, may err, and this impairs our ability to set and maintain optimal criteria for perceptual decisions, which I argue is central to perception consciousness. I outline three possibilities of how conscious perception might be affected by failures of ‘higher-order’ representation. These all imply that one can have a dissociation between consciousness and performance. This model readily explains blindsight and hallucinations in formal terms, and is beginning to receive direct empirical support. I end by discussing some philosophical implications of the model. (shrink)

A major problem facing no-collapse interpretations of quantum mechanics in the tradition of Everett is how to understand the probabilistic axiom of quantum mechanics (the Born rule) in the context of a deterministic theory in which every outcome of a measurement occurs. Deutsch claims to derive a decision-theoretic analogue of the Born rule from the non-probabilistic part of quantum mechanics and some non-probabilistic axioms of classical decision theory, and hence concludes that no probabilistic axiom is needed. I argue that Deutsch’s (...) derivation begs the question. (shrink)

The aim of this paper is to study the monotonicity properties with respect to the probability distribution of the state processes, of optimal decisions in bandit decision problems. Orderings of dynamic discrete projects are provided by extending the notion of stochastic dominance to stochastic processes.

Taking the philosophical standpoint, this article compares the mathematical theory of individual decision-making with the folk psychology conception of action, desire and belief. It narrows down its topic by carrying the comparison vis-à-vis Savage's system and its technical concept of subjective probability, which is referred to the basic model of betting as in Ramsey. The argument is organized around three philosophical theses: (i) decision theory is nothing but folk psychology stated in formal language (Lewis), (ii) the former substantially improves on (...) the latter, but is unable to overcome its typical limitations, especially its failure to separate desire and belief empirically (Davidson), (iii) the former substantially improves on the latter, and through these innovations, overcomes some of the limitations. The aim of the article is to establish (iii) not only against the all too simple thesis (i), but also against the subtle thesis (ii). (shrink)

A comment on Paul Schoemaker's target article in Behavioral and Brain Sciences, 14 (1991), p. 205-215, "The Quest for Optimality: A Positive Heuristic of Science?" (https://doi.org/10.1017/S0140525X00066140). This comment argues that the optimizing model of decision leads to an infinite regress, once internal costs of decision (i.e., information and computation costs) are duly taken into account.

This article critically discusses the concept of economic rationality, arguing that it is too narrow and specific to encompass the full concept of practical rationality. Economic rationality is identified here with the use of the optimizing model of decision, as well as of expected utility apparatus to deal with uncertainty. To argue that practical rationality is broader than economic rationality, the article claims that practical rationality includes bounded rationality as a particular case, and that bounded rationality cannot be reduced to (...) economic rationality as defined here. (shrink)

It has been argued by several philosophers that a morally motivated rational agent who has to make decisions under conditions of moral uncertainty ought to maximize expected moral value in his choices, where the expectation is calculated relative to the agent's moral uncertainty. I present a counter-example to this thesis and to a larger family of decision rules for choice under conditions of moral uncertainty. Based on this counter-example, I argue against the thesis and suggest a reason for its failure (...) – that it is based on the false assumption that inter-theoretical comparisons of moral value are meaningful. (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)

The paper introduces the concept of polar decision rules and establishes that majority rules are polar rules. We identify second best rules and penultimate rules in cases that majority rules are optimal or the most inferior, respectively. We especially specify the almost expert rule and the almost majority rule as the secondary rules of the expert and majority rules, respectively.

The Many Gods Objection (MGO) is widely viewed as a decisive criticism of Pascal’s Wager. By introducing a plurality of hypotheses with infinite expected utility into the decision matrix, the wagerer is left without adequate grounds to decide between them. However, some have attempted to rebut this objection by employing various criteria drawn from the theological tradition. Unfortunately, such defenses do little good for an argument that is supposed to be an apologetic aimed at atheists and agnostics. The purpose of (...) this paper is to offer a defensive strategy of a different sort, one more suited to the Wager’s apologetic aim and status as a decision under ignorance. Instead of turning to criteria independent of the Wager, it will be shown that there are characteristics already built into its decision theoretic structure that can be used to block many categories of theological hypotheses including MGO’s more outrageous “cooked-up” hypotheses and “philosophers’ fictions”. -/- Please note that there are editorial errors in the published version. They have been corrected in the attached. (shrink)