Theory and Decision 71 (2):195-210 (2011)
Abstract |
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.
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Keywords | Prescriptive decision analysis Decisions with partial knowledge Respect for dominance Consequentialism |
Categories | (categorize this paper) |
DOI | 10.1007/s11238-009-9182-y |
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References found in this work BETA
Judgment Under Uncertainty: Heuristics and Biases.Daniel Kahneman, Paul Slovic & Amos Tversky (eds.) - 1982 - Cambridge University Press.
Judgment Under Uncertainty: Heuristics and Biases.Amos Tversky & Daniel Kahneman - 1974 - Science 185 (4157):1124-1131.
Theory of Games and Economic Behavior.John Von Neumann & Oskar Morgenstern - 1944 - Princeton, NJ, USA: Princeton University Press.
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