scholarly journals Non-human primates satisfy utility maximization in compliance with the continuity axiom of Expected Utility Theory

2020 ◽  
Author(s):  
Simone Ferrari-Toniolo ◽  
Philipe M. Bujold ◽  
Fabian Grabenhorst ◽  
Raymundo Báez-Mendoza ◽  
Wolfram Schultz
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Utility Maximization ◽  
Expected Utility Theory ◽  
Decision Makers ◽  
Utility Measure ◽  
Trade Off ◽  
Subjective Value ◽  
Subjective Utility ◽  
Continuity Axiom

ABSTRACTExpected Utility Theory (EUT), the first axiomatic theory of risky choice, describes choices as a utility maximization process: decision makers assign a subjective value (utility) to each choice option and choose the one with the highest utility. The continuity axiom, central to EUT and its modifications, is a necessary and sufficient condition for the definition of numerical utilities. The axiom requires decision makers to be indifferent between a gamble and a specific probabilistic combination of a more preferred and a less preferred gamble. While previous studies demonstrated that monkeys choose according to combinations of objective reward magnitude and probability, a concept-driven experimental approach for assessing the axiomatically defined conditions for maximizing subjective utility by animals is missing. We experimentally tested the continuity axiom for a broad class of gamble types in four male rhesus macaque monkeys, showing that their choice behavior complied with the existence of a numerical utility measure as defined by the economic theory. We used the numerical quantity specified in the continuity axiom to characterize subjective preferences in a magnitude-probability space. This mapping highlighted a trade-off relation between reward magnitudes and probabilities, compatible with the existence of a utility function underlying subjective value computation. These results support the existence of a numerical utility function able to describe choices, allowing for the investigation of the neuronal substrates responsible for coding such rigorously defined quantity.SIGNIFICANCE STATEMENTA common assumption of several economic choice theories is that decisions result from the comparison of subjectively assigned values (utilities). This study demonstrated the compliance of monkey behavior with the continuity axiom of Expected Utility Theory, implying a subjective magnitude-probability trade-off relation which supports the existence of numerical subjective utility directly linked to the theoretical economic framework. We determined a numerical utility measure able to describe choices, which can serve as a correlate for the neuronal activity in the quest for brain structures and mechanisms guiding decisions.

scholarly journals Nonhuman Primates Satisfy Utility Maximization in Compliance with the Continuity Axiom of Expected Utility Theory

2021 ◽  
Vol 41 (13) ◽  
pp. 2964-2979 ◽  
Author(s):  
Simone Ferrari-Toniolo ◽  
Philipe M. Bujold ◽  
Fabian Grabenhorst ◽  
Raymundo Báez-Mendoza ◽  
Wolfram Schultz
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Utility Maximization ◽  
Nonhuman Primates ◽  
Expected Utility Theory ◽  
Continuity Axiom

Compliance with the Continuity Axiom of Expected Utility Theory Supports Utility Maximization in Monkeys

2020 ◽  
Author(s):  
Simone Ferrari-Toniolo ◽  
Philipe M. Bujold ◽  
Fabian Grabenhorst ◽  
Raymundo Báez-Mendoza ◽  
Wolfram Schultz
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Utility Maximization ◽  
Expected Utility Theory ◽  
Continuity Axiom

scholarly journals Continuity and catastrophic risk

2021 ◽  
pp. 1-9
Author(s):  
H. Orri Stefánsson
Keyword(s):  
Social Welfare ◽  
Decision Maker ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Continuity Condition ◽  
Trade Off ◽  
Catastrophic Risk ◽  
Lifetime Income ◽  
Continuity Axiom

Abstract Suppose that a decision-maker’s aim, under certainty, is to maximize some continuous value, such as lifetime income or continuous social welfare. Can such a decision-maker rationally satisfy what has been called ‘continuity for easy cases’ while at the same time satisfying what seems to be a widespread intuition against the full-blown continuity axiom of expected utility theory? In this note I argue that the answer is ‘no’: given transitivity and a weak trade-off principle, continuity for easy cases violates the anti-continuity intuition. I end the note by exploring an even weaker continuity condition that is consistent with the aforementioned intuition.

scholarly journals Comparing utility functions between risky and riskless choice in rhesus monkeys

2021 ◽  
Author(s):  
Philipe M. Bujold ◽  
Simone Ferrari-Toniolo ◽  
Leo Chi U Seak ◽  
Wolfram Schultz
Keyword(s):  
Utility Function ◽  
Utility Theory ◽  
Utility Maximization ◽  
Choice Behavior ◽  
Expected Utility Theory ◽  
Utility Functions ◽  
Random Utility Maximization ◽  
Risky Choices ◽  
Neuronal Mechanisms ◽  
Subjective Value

AbstractDecisions can be risky or riskless, depending on the outcomes of the choice. Expected Utility Theory describes risky choices as a utility maximization process: we choose the option with the highest subjective value (utility), which we compute considering both the option’s value and its associated risk. According to the random utility maximization framework, riskless choices could also be based on a utility measure. Neuronal mechanisms of utility-based choice may thus be common to both risky and riskless choices. This assumption would require the existence of a utility function that accounts for both risky and riskless decisions. Here, we investigated whether the choice behavior of macaque monkeys in riskless and risky decisions could be described by a common underlying utility function. We found that the utility functions elicited in the two choice scenarios were different from each other, even after taking into account the contribution of subjective probability weighting. Our results suggest that distinct utility representations exist for riskless and risky choices, which could reflect distinct neuronal representations of the utility quantities, or distinct brain mechanisms for risky and riskless choices. The different utility functions should be taken into account in neuronal investigations of utility-based choice.

Size Doesn't Really Matter

2008 ◽  
Vol 55 (1) ◽  
pp. 31-37 ◽  
Author(s):  
Briony D. Pulford ◽  
Andrew M. Colman
Keyword(s):  
Experimental Investigation ◽  
Expected Utility ◽  
Utility Theory ◽  
Ambiguity Aversion ◽  
Expected Utility Theory ◽  
Decision Makers ◽  
Aversion Effect

Abstract. When attempting to draw a ball of a specified color either from an urn containing 50 red balls and 50 black balls or from an urn containing an unknown ratio of 100 red and black balls, a majority of decision makers prefer the known-risk urn, and this ambiguity aversion effect violates expected utility theory. In an experimental investigation of the effect of urn size on ambiguity aversion, 149 participants showed similar levels of aversion when choosing from urns containing 2, 10, or 100 balls. The occurrence of a substantial and significant ambiguity aversion effect even in the smallest urn suggests that influential theoretical interpretations of ambiguity aversion may need to be reconsidered.

scholarly journals UNACCEPTABLE RISKS AND THE CONTINUITY AXIOM

2012 ◽  
Vol 28 (1) ◽  
pp. 31-42 ◽  
Author(s):  
Karsten Klint Jensen
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Extreme Case ◽  
Expected Utility Theory ◽  
Alternative Proof ◽  
Ordinal Ranking ◽  
Gains And Losses ◽  
Continuity Axiom

Consider a sequence of outcomes of descending value, A > B > C > . . . > Z. According to Larry Temkin, there are reasons to deny the continuity axiom in certain ‘extreme’ cases, i.e. cases of triplets of outcomes A, B and Z, where A and B differ little in value, but B and Z differ greatly. But, Temkin argues, if we assume continuity for ‘easy’ cases, i.e. cases where the loss is small, we can derive continuity for the ‘extreme’ case by applying the axiom of substitution and the axiom of transitivity. The rejection of continuity for ‘extreme’ cases therefore renders the triad of continuity in ‘easy’ cases, the axiom of substitution and the axiom of transitivity inconsistent.As shown by Arrhenius and Rabinowitz, Temkin's argument is flawed. I present a result which is stronger than their alternative proof of an inconsistency. However, this result is not quite what Temkin intends, because it only refers to an ordinal ranking of the outcomes in the sequence, whereas Temkin appeals to intuitions about the size of gains and losses. Against this background, it is argued that Temkin's trilemma never gets off the ground. This is because Temkin appeals to two mutually inconsistent conceptions of aggregation of value. Once these are clearly separated, it will transpire, in connection with each of them, that one of the principles to be rejected does not appear plausible. Hence, there is nothing surprising or challenging about the result; it is merely a corollary to Expected Utility Theory.

scholarly journals Comparing utility functions between risky and riskless choice in rhesus monkeys

2021 ◽  
Author(s):  
Philipe M. Bujold ◽  
Leo Chi U. Seak ◽  
Wolfram Schultz ◽  
Simone Ferrari-Toniolo
Keyword(s):  
Utility Function ◽  
Rhesus Monkeys ◽  
Utility Theory ◽  
Utility Maximization ◽  
Choice Behavior ◽  
Expected Utility Theory ◽  
Utility Functions ◽  
Random Utility Maximization ◽  
Neuronal Mechanisms ◽  
Subjective Value

AbstractDecisions can be risky or riskless, depending on the outcomes of the choice. Expected utility theory describes risky choices as a utility maximization process: we choose the option with the highest subjective value (utility), which we compute considering both the option’s value and its associated risk. According to the random utility maximization framework, riskless choices could also be based on a utility measure. Neuronal mechanisms of utility-based choice may thus be common to both risky and riskless choices. This assumption would require the existence of a utility function that accounts for both risky and riskless decisions. Here, we investigated whether the choice behavior of two macaque monkeys in risky and riskless decisions could be described by a common underlying utility function. We found that the utility functions elicited in the two choice scenarios were different from each other, even after taking into account the contribution of subjective probability weighting. Our results suggest that distinct utility representations exist for risky and riskless choices, which could reflect distinct neuronal representations of the utility quantities, or distinct brain mechanisms for risky and riskless choices. The different utility functions should be taken into account in neuronal investigations of utility-based choice.

Costs of abandoning the Sure-Thing Principle

2015 ◽  
Vol 45 (5-6) ◽  
pp. 827-840 ◽  
Author(s):  
Rachael Briggs
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Decision Makers ◽  
Sequential Choice ◽  
The World ◽  
Sure Thing Principle

Risk-weighted expected utility theory (REU theory for short) permits preferences which violate the Sure-Thing Principle (STP for short). But preferences that violate the STP can lead to bad decisions in sequential choice problems. In particular, they can lead decision-makers to adopt a strategy that is dominated – i.e. a strategy such that some available alternative leads to a better outcome in every possible state of the world.

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