The Road Ahead

2019 ◽  
pp. 229-238
Author(s):  
Richard Pettigrew
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Expected Utility Theory ◽  
Rational Decision ◽  
The Road ◽  
Risk Sensitive ◽  
Aggregate Utility ◽  
Imprecise Credences ◽  
Theory Framework

This final chapter of the book summarizes the conclusions of the preceding chapters and looks forward to how the Aggregate Utility Solution might be generalized so that it applies not only to the expected utility theory framework, but also to other frameworks for rational decision-making. In particular, it explains how we might extend the Aggregate Utility Solution to the framework of imprecise credences and utilities, and to the framework of risk-sensitive decision theories.

The Economists’ Orthodoxy: Expected Utility Theory

2019 ◽  
pp. 9-18
Author(s):  
Richard Pettigrew
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Rational Decision ◽  
Rational Decision Making ◽  
The World ◽  
Orthodox Theory

This chapter provides an introduction to expected utility theory, the orthodox theory of rational decision-making. It introduces the framework of states of the world, credences, utilities, expected utilities, and preferences. The chapter distinguishes two interpretations of expected utility theory: the realist and the constructivist. It argues in favour of realism and explains that this will be assumed throughout the book. It describes how the problem of choosing for changing selves arises in the theory described here.

scholarly journals Expected Utility Theory for Monitoring-Based Decision-Making

2016 ◽  
Vol 104 (8) ◽  
pp. 1647-1661 ◽  
Author(s):  
Carlo Cappello ◽  
Daniele Zonta ◽  
Branko Glisic
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory

scholarly journals Dynamic Portfolio Selection in a Dual Expected Utility Theory Framework

2006 ◽  
Vol 36 (02) ◽  
pp. 505-520 ◽  
Author(s):  
Marisa Cenci ◽  
Massimiliano Corradini ◽  
Andrea Gheno
Keyword(s):  
Portfolio Selection ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Distortion Function ◽  
Short Sales ◽  
Optimal Portfolios ◽  
Dynamic Portfolio ◽  
First Time ◽  
Theory Framework

In this paper the dynamic portfolio selection problem is studied for the first time in a dual utility theory framework. The Wang transform is used as distortion function and well diversified optimal portfolios result both with and without short sales allowed.

scholarly journals ECONOMICS OF RANDOMNESS: BEHAVIORAL ASPECTS OF DECISION MAKING UNDER RISK

2017 ◽  
Vol 9 (2) ◽  
pp. 7-14
Author(s):  
Alexander Krasilnikov
Keyword(s):  
Decision Making ◽  
Risk Analysis ◽  
Uncertainty Analysis ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Probabilistic Methods ◽  
Risk And Uncertainty ◽  
Decision Making Under Risk ◽  
History Of

The paper discusses evolution of the concept of risk in economics. History of probabilistic methods and approaches to risk and uncertainty analysis is considered. Expected utility theory, behavioral approaches, heuristic models and methods of neuroeconomics are analyzed. Author investigates stability of neoclassical program related to risk analysis and suggests further directions of development.

Introduction

2018 ◽  
pp. 3-22
Author(s):  
Barry Hoffmaster ◽  
Cliff Hooker
Keyword(s):  
Decision Making ◽  
At Risk ◽  
Problem Solving ◽  
Genetic Counselling ◽  
Expected Utility ◽  
Rational Decision ◽  
Genetic Condition ◽  
Affected Child ◽  
Rational Decision Making ◽  
Formal Rationality

An example of real decision making is presented to illustrate two different accounts of rationality. Women who are at risk of having a child with a genetic condition must decide, after receiving genetic counselling, whether they will try to get pregnant. The genetic counsellors believe the women should use the principle of maximizing expected utility – multiply the probabilities of the outcomes (provided by geneticists) with the values of those outcomes (provided by each woman) and choose the option with the greatest expected utility. This principle manifests the formal rationality of moral philosophy. The women discarded it, however, because they knew that, regardless of the probability, they could have an affected child. Instead, they imagined scenarios of what it could be like living with an affected child to assess whether they could be able to live with their worst scenarios. The process of deliberation these women used to make their decisions is eminently rational, an exemplar of non-formal rationality. This book is about the rationality of deliberation and the judgments that result. The lesson is that we can only appreciate intelligent problem solving in ethics if we embrace a richer, more expansive conception of rational decision making.

Measuring Utility, Destabilizing EUT

2018 ◽  
pp. 261-280
Author(s):  
Ivan Moscati
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Behavioral Models ◽  
Decision Making Under Risk ◽  
Utility Measurement ◽  
Elicitation Methods ◽  
Series Of Experiments

Chapter 16 shows how the validity of expected utility theory (EUT) was increasingly called into question between the mid-1960s and the mid-1970s and discusses how a series of experiments performed from 1974 to 1985 undermined the earlier confidence that EUT makes it possible to measure utility. Beginning in the mid-1960s, in a series of experiments seminal to the field later called behavioral economics, Sarah Lichtenstein, Paul Slovic, Amos Tversky, and others showed that decision patterns violating EUT are systematic. The new experimenters who engaged with the EUT-based measurement of utility from the mid-1970s, namely Uday Karmarkar, Richard de Neufville, Paul Schoemaker, and coauthors, showed that different elicitation methods to measure utility, which according to EUT should produce the same outcome, generate different measures. These findings contributed to destabilizing EUT, undermined the confidence in EUT-based utility measurement, and helped foster a blossoming of novel behavioral models of decision-making under risk.

Marschak and Utility Measurement at Yale

2018 ◽  
pp. 239-246
Author(s):  
Ivan Moscati
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Expected Utility Theory ◽  
The Other ◽  
Yale University ◽  
Percent Correct ◽  
History Of ◽  
The 1950S ◽  
The 1960S ◽  
Experimental Findings

Chapter 14 continues the history of the experimental attempts to measure utility by discussing two further experiments performed at Yale University in the early 1960s, one by Trenery Dolbear and the other by Jacob Marschak in association with Gordon Becker and Morris DeGroot. Like the experiments conducted in the 1950s, these were also based on expected utility theory (EUT) and aimed at measuring the utility of money of individuals on the basis of their preferences between gambles where small amounts of money were at stake. There are some differences in the designs of the experiments of the 1950s and those of the 1960s. Like the experimenters of the 1950s, however, Dolbear, Marschak, Becker, and DeGroot also confidently assessed their experimental findings as validating EUT: the theory was not 100 percent correct, but in an approximate sense, it appeared to be an acceptable descriptive theory of decision-making under risk.

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