Erkenntnis 86 (2):367-387 (2021)

Authors
Jean Baccelli
University of Pittsburgh
Abstract
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.
Keywords decision theory
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DOI 10.1007/s10670-019-00108-3
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References found in this work BETA

The Logic of Decision.Richard C. Jeffrey - 1965 - University of Chicago Press.
The Foundations of Causal Decision Theory. [REVIEW]Mirek Janusz - 2001 - Philosophical Review 110 (2):296-300.
Do Bets Reveal Beliefs?Jean Baccelli - 2017 - Synthese 194 (9):3393-3419.

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