Actions, Preferences, and Risk

2020 ◽  
pp. 205-230
Author(s):  
Sergio Tenenbaum
Keyword(s):  
Decision Theory ◽  
Instrumental Rationality ◽  
Allais Paradox ◽  
Risk And Uncertainty ◽  
Extended Theory ◽  
Satisfactory Account ◽  
Formal Theories

Formal theories of instrumental rationality, such as orthodox decision theory, often provide a powerful account of the rationality of choice under risk. Can the extended theory of instrumental rationality (ETR) be similarly extended to contexts of risk and uncertainty? Chapter 9 argues that ETR can provide a satisfactory account of rationality in these contexts and that it can actually co-opt the resources of decision theory exactly in the cases in which the theory seems most plausible; namely, the pursuit of what I call “general means” (such as the pursuit of health or wealth). Moreover ETR plausibly renders coherent certain ubiquitous choice dispositions (such as the ones manifested in the Allais paradox) that seem incompatible with orthodox decision theory.

Pursuing Ends as the Fundamental Given Attitude

2020 ◽  
pp. 49-82
Author(s):  
Sergio Tenenbaum
Keyword(s):  
Decision Theory ◽  
Instrumental Rationality ◽  
Rational Agent ◽  
Extended Theory ◽  
Instrumental Reasoning

The extended theory of instrumental rationality (ETR) takes the intentional pursuit of ends to be the only relevant attitude for the theory of instrumental rationality, and takes the principle of instrumental reasoning, a non-comparative principle, to be the only principle of derivation. However, it seems that if the agent has more than one end, we’ll need to introduce comparative or graded attitudes, such as the preference orderings in orthodox decision theory, in order to explain the rationality of choices among competing ends. In fact, ETR can provide a significantly better account of how a rational agent pursues multiple indeterminate ends through time than theories that make use of comparative and graded attitudes. ETR proposes that in the pursuit of such ends a rational agent must inevitably “satisfice” rather than maximize. At the same time, the chapter explains how some comparative attitudes, such as preferences, can be incorporated into ETR.

scholarly journals Game Theory Without Partitions, and Applications to Speculation and Consensus

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
John Geanakoplos
Keyword(s):  
Game Theory ◽  
Information Processing ◽  
Decision Theory ◽  
Common Knowledge ◽  
Extended Theory ◽  
Knowing That ◽  
Processing Errors ◽  
Necessary And Sufficient

Abstract Decision theory and game theory are extended to allow for information processing errors. This extended theory is then used to reexamine market speculation and consensus, both when all actions (opinions) are common knowledge and when they may not be. Five axioms of information processing are shown to be especially important to speculation and consensus. They are called nondelusion, knowing that you know (KTYK), nested, balanced, and positively balanced. We show that it is necessary and sufficient that each agent's information processing errors be (1) nondeluded and balanced so that the agents cannot agree to disagree, (2) nondeluded and positively balanced so that it cannot be common knowledge that they are speculating, and (3) nondeluded and KTYK and nested so that agents cannot speculate in equilibrium. Each condition is strictly weaker than the next one, and the last is strictly weaker than partition information.

The Allais paradox: what it became, what it really was, what it now suggests to us

2019 ◽  
Vol 35 (3) ◽  
pp. 423-459 ◽  
Author(s):  
Philippe Mongin
Keyword(s):  
Decision Theory ◽  
Expected Utility ◽  
Historical Perspective ◽  
Short Sequence ◽  
Allais Paradox ◽  
Von Neumann ◽  
The Real ◽  
Definition Of ◽  
Normative Argument

AbstractWhereas many others have scrutinized the Allais paradox from a theoretical angle, we study the paradox from an historical perspective and link our findings to a suggestion as to how decision theory could make use of it today. We emphasize that Allais proposed the paradox as a normative argument, concerned with ‘the rational man’ and not the ‘real man’, to use his words. Moreover, and more subtly, we argue that Allais had an unusual sense of the normative, being concerned not so much with the rationality of choices as with the rationality of the agent as a person. These two claims are buttressed by a detailed investigation – the first of its kind – of the 1952 Paris conference on risk, which set the context for the invention of the paradox, and a detailed reconstruction – also the first of its kind – of Allais’s specific normative argument from his numerous but allusive writings. The paper contrasts these interpretations of what the paradox historically represented, with how it generally came to function within decision theory from the late 1970s onwards: that is, as an empirical refutation of the expected utility hypothesis, and more specifically of the condition of von Neumann–Morgenstern independence that underlies that hypothesis. While not denying that this use of the paradox was fruitful in many ways, we propose another use that turns out also to be compatible with an experimental perspective. Following Allais’s hints on ‘the experimental definition of rationality’, this new use consists in letting the experiment itself speak of the rationality or otherwise of the subjects. In the 1970s, a short sequence of papers inspired by Allais implemented original ways of eliciting the reasons guiding the subjects’ choices, and claimed to be able to draw relevant normative consequences from this information. We end by reviewing this forgotten experimental avenue not simply historically, but with a view to recommending it for possible use by decision theorists today.

Deontological Decision Theory and the Grounds of Subjective Permissibility

2019 ◽  
pp. 204-222
Author(s):  
Seth Lazar
Keyword(s):  
Decision Making ◽  
Decision Theory ◽  
Expected Utility ◽  
Imperfect Information ◽  
Perfect Information ◽  
Risk And Uncertainty

If we had perfect information, then we could say, for any given objectively permissible act, what makes it objectively permissible. But when we have imperfect information, when we must decide under risk and uncertainty, what then makes an act subjectively permissible or impermissible? There are two salient possibilities. The first is the “verdicts” approach. It grounds judgments of subjective permissibility in probabilistically discounted judgments of objective permissibility. The principle “minimize expected objective wrongness” takes this approach. The second is the “reasons” approach. It grounds subjective permissibility in probabilistically discounted objective reasons. “Maximize expected utility” is one example. Chapter 10 considers whether the verdicts approach or the reasons approach to grounding judgments of subjective permissibility is better suited for deontological decision-making with imperfect information. Perhaps surprisingly, the reasons approach comes out on top.

Extended Action and Instrumental Rationality

2020 ◽  
pp. 1-26
Author(s):  
Sergio Tenenbaum
Keyword(s):  
Practical Reasoning ◽  
General Structure ◽  
Instrumental Rationality ◽  
Extended Theory ◽  
Intentional Actions ◽  
Extended Action ◽  
Main Ideas ◽  
The Given

Chapter 1 presents the general structure of a theory of instrumental rationality, as well as laying down some of the main ideas and motivations for the extended theory of instrumental rationality (ETR) developed in the book. It characterizes the content of a theory of instrumental rationality in terms of its given attitudes (the “inputs” for a theory of instrumental rationality), its principles of coherence, its principles of derivation, and what counts as the conclusion of practical reasoning or the exercise of our rational powers (the “outputs”) of instrumental rationality. On ETR, intentional actions are both the given attitudes and the exercises of our instrumental, rational powers.

Future-Directed Intentions and the Theory of Instrumental Rationality

2020 ◽  
pp. 111-142
Author(s):  
Sergio Tenenbaum
Keyword(s):  
Instrumental Rationality ◽  
Extended Theory ◽  
Michael Bratman ◽  
Extended Agency

This chapter considers a major alternative to the extended theory of instrumental rationality (ETR): the view, pioneered by Michael Bratman, that future-directed intentions (FDIs) have a fundamental role to play in our understanding of the rationality of extended agency. FDIs come in many flavours; they can be specific intentions, plans, policies, or projects. I argue in this chapter that ETR naturally classifies some of these “flavours” as instances of extended actions, and therefore they are structurally identical and subject to the exact same basic instrumental requirements as other instances of extended actions. Once we see this point, it turns out that purported norms and principles governing FDIs are either superfluous or invalid.

Book Reviews

2010 ◽  
Vol 48 (1) ◽  
pp. 153-156 ◽  
Keyword(s):  
Decision Theory ◽  
Revealed Preference ◽  
Bayesian Decision Theory ◽  
Professor Emeritus ◽  
University Of Michigan ◽  
Bayesian Decision ◽  
Risk And Uncertainty ◽  
Classical Probability ◽  
University College London

Tilman Borgers of University of Michigan reviews “Rational Decisions” by Ken Binmore,. The EconLit Abstract of the reviewed work begins “Explores standard theories of choice and belief under risk and uncertainty, focusing on Bayesian decision theory. Discusses revealed preference; game theory; risk; utilitarianism; classical probability; frequency; Bayesian decision theory; epistemology; large worlds; and mathematical notes. Binmore is Professor Emeritus of Economics at University College London. Index.”

Decision Theory

Philosophy ◽  
2013 ◽  
Author(s):  
Paul Weirich
Keyword(s):  
Social Sciences ◽  
Decision Theory ◽  
Human Behavior ◽  
Practical Reasoning ◽  
Large Body ◽  
Mental States ◽  
Instrumental Rationality ◽  
Collective Rationality ◽  
Public Science ◽  
Intellectual Interest

Decision theory is multidisciplinary and treats all aspects of choice. It is the foundation of the behavioral and social sciences. Philosophical decision theory examines and refines decision theory’s philosophical claims. Its primary subject is rational choice. Thus, it treats normative matters and is allied with branches of philosophy such as epistemology and ethics. Decision theory assists epistemology in its study of rational belief and assists ethics in its study of good acts, goals, and character traits. The behavioral and social sciences use decision theory to construct models of human behavior. Often a theory of rationality yields a good first approximation of human behavior. A general theory of rationality covers individuals and groups of people and shows how the rationality of individuals leads to the collective rationality of groups. It offers a fruitful foundation for the behavioral and social sciences. Decision theory’s main normative question concerns the nature of rationality. What principles of rationality govern choice? Principles of instrumental rationality counsel adoption of means appropriate to one’s ends. A large body of literature explicates this advice. It elaborates the view that instrumental rationality requires maximization of subjective utility: that is, acting to maximize achievement of one’s goals. An instrumentally rational act is rational conditional on the rationality of the ends the act serves and the agent’s processing of evidence about appropriate means. Other principles of rationality govern adoption of ends. Philosophical decision theory has its roots in studies of practical reasoning going back to Aristotle. It blossomed in the 20th century because of the work of Frank Ramsey, Bruno de Finetti, Leonard Savage, Richard Jeffrey, and many others. It thrives because of its intrinsic intellectual interest and because it supports traditional areas of philosophy such as epistemology and ethics. Philosophical decision theory unifies normative studies of belief, desire, and action. Its method distinguishes it from other investigations of choice. Although it draws on the behavioral and social sciences, its task is to advance foundational studies of choice rather than empirical investigations of it. Philosophy has the freedom to adopt perspectives on choice that experiments and surveys do not attempt. The normative assessment of choice is its principal exercise of this liberty. It also investigates the introspective side of choice and interpersonal comparisons of mental states, which experimentalists find insufficiently accessible to serve as the basis of public science.

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