Theory and Decision 68 (4):463-487 (2010)

Katie Steele
Australian National University
There are at least two plausible generalisations of subjective expected utility (SEU) theory: cumulative prospect theory (which relaxes the independence axiom) and Levi’s decision theory (which relaxes at least ordering). These theories call for a re-assessment of the minimal requirements of rational choice. Here, I consider how an analysis of sequential decision making contributes to this assessment. I criticise Hammond’s (Economica 44(176):337–350, 1977; Econ Philos 4:292–297, 1988a; Risk, decision and rationality, 1988b; Theory Decis 25:25–78, 1988c) ‘consequentialist’ argument for the SEU preference axioms, but go on to formulate a related diachronic-Dutch-book-style’ argument that better achieves Hammond’s aims. Some deny the importance of Dutch-book sure losses, however, in which case, Seidenfeld’s (Econ Philos 4:267–290, 1988a) argument that distinguishes between theories that relax independence and those that relax ordering is relevant. I unravel Seidenfeld’s argument in light of the various criticisms of it and show that the crux of the argument is somewhat different and much more persuasive than what others have taken it to be; the critical issue is the modelling of future choices between ‘indifferent’ decision-tree branches in the sequential setting. Finally, I consider how Seidenfeld’s conclusions might nonetheless be resisted.
Keywords Sequential choice  Dynamic decision making  Independence axiom  Ordering axiom  Diachronic Dutch book argument  Expected utility theory
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DOI 10.1007/s11238-009-9145-3
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References found in this work BETA

The Foundations of Statistics.Leonard J. Savage - 1954 - Wiley Publications in Statistics.
On Indeterminate Probabilities.Isaac Levi - 1974 - Journal of Philosophy 71 (13):391-418.

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You’Ve Come a Long Way, Bayesians.Jonathan Weisberg - 2015 - Journal of Philosophical Logic 44 (6):817-834.

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