Multiple Beliefs, Dominance and Dynamic Consistency

2021 ◽  
Author(s):  
Tommi Ekholm ◽  
Erin Baker
Keyword(s):  
Climate Change ◽  
Decision Making ◽  
Expected Utility ◽  
A Priori ◽  
Decision Rules ◽  
Dynamic Consistency ◽  
Subjective Expected Utility ◽  
Dynamic Inconsistency ◽  
Real World Problem ◽  
Second Period

This paper investigates multiperiod decisions under multiple beliefs. We explore the dynamic consistency of both complete and incomplete orderings. We focus on a dominance concept that supports decision-making under multiple characterizations of uncertainty by ruling out strategies that are dominated across a set of beliefs. We uncover a distinction between two types of dynamic inconsistency, which we label fallacious and fallible inconsistency. Fallacious inconsistency occurs when an a priori optimal strategy is suboptimal in the second period, thus requiring the decision-maker to depart from the original strategy. Fallible inconsistency occurs when an a priori suboptimal second-period action ceases being suboptimal from the perspective of the second-period preferences. We introduce corresponding definitions of dynamic consistency and show that the two types of consistency are equivalent for complete orderings, but differ for incomplete orderings. Subjective expected utility is dynamically consistent and non-expected-utility decision rules, such as minmax, are not. We show that the dominance relation over beliefs falls between these two: it is immune to the more severe fallacious inconsistency, but not to the less problematic fallible inconsistency. We illustrate the method and concepts using a numerical example addressing a focal, real-world problem of risk and ambiguity regarding climate change. This paper was accepted by Ilia Tsetlin, decision analysis.

Specialist versus Generalist Decision Making

2018 ◽  
Author(s):  
Armin W. Schulz
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Utility Maximization ◽  
Decision Rules ◽  
Mental States ◽  
Vast Array ◽  
Expected Utility Maximization

A number of scholars argue that human and animal decision making, at least to the extent that it is driven by representational mental states, should be seen to be the result of the application of a vast array of highly specialized decision rules. By contrast, other scholars argue that we should see human and animal representational decision making as the result of the application of a handful general principles—such as expected utility maximization—to a number of specific instances. This chapter shows that, using the results of chapters 5 and 6, it becomes possible to move this dispute forwards: the account of the evolution of conative representational decision making defended in chapter 6 together with the account of the evolution of cognitive representational decision making defended in chapter 5, makes clear that both sides of this dispute contain important insights, and that it is possible to put this entire dispute on a clearer and more precise foundation. Specifically, I show that differentially general decision rules are differentially adaptive in different circumstances: certain particular circumstances favor specialized decision making, and certain other circumstances favor more generalist decision making.

scholarly journals Farm decision making under risk and uncertainty

1997 ◽  
Vol 45 (2) ◽  
pp. 307-328 ◽  
Author(s):  
G.B.C. Backus ◽  
V.R. Eidman ◽  
A.A. Dijkhuizen
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Decision Problems ◽  
Subjective Expected Utility ◽  
Risk And Uncertainty ◽  
Decision Making Under Risk ◽  
Agricultural Risk ◽  
Risk Research

Relevant portions of the risk literature are reviewed, relating them to observed behaviour in farm decision-making. Relevant topics for applied agricultural risk research are proposed. The concept of decision making under risk and uncertainty is discussed by reviewing the theory of Subjective Expected Utility and its limitations. Subjective Expected Utility theory is the major framework for thinking systematically through complex issues of decision. Limitations of Subjective Expected Utility theory were that its application to unique decisions is doubtful, that it does not contribute to difficulties in determining the available decision alternatives, and that it is cast in a timeless setting, making the theoretic framework to a very limited extent helpful to solve real world decision problems. Most empirical studies indicate that farmers are risk neutral to slightly risk averse. It is doubtful whether decision makers could be classified according to their risk preferences. A presented overview of applied risk responses reveals much attention for diversification of the enterprise and of production practices, maintaining reserves, and farm expansion. Research reports on observed problems in farm decision making behaviour are lacking. Proposed topics for agricultural risk research include the assessment of the need for a strategic change, the creation of databases to determine both the (co)variances of input and output prices, the effectiveness of various kinds of decision support for different decision problems, and methods for applied scenario analysis to deal with long-run risk.

Subjective expected utility: A model of decision-making

1981 ◽  
Vol 32 (5) ◽  
pp. 391-399 ◽  
Author(s):  
Baruch Fischhoff ◽  
Bernard Goitein ◽  
Zur Shapira
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Subjective Expected Utility

scholarly journals A Small Chance of Disaster

2013 ◽  
Vol 21 (S1) ◽  
pp. S27-S31 ◽  
Author(s):  
John Broome
Keyword(s):  
Climate Change ◽  
Decision Making ◽  
Expected Utility ◽  
Utility Theory ◽  
Expected Utility Theory ◽  
Moral Judgement ◽  
Decisions Under Uncertainty

Expected utility theory tells us how we should make decisions under uncertainty: we should choose the option that leads to the greatest expectation of utility. This may, however, not be the option that is likely to produce the best result – that may be the wrong choice if it also creates a small chance of a great disaster. A small chance of disaster may be the most important consideration in decision making. Climate change creates a small chance of disaster, and some authors believe this to be the most important consideration in deciding our response to climate change. To know whether they are right, we need to make a moral judgement about just how bad the disaster would be.

Prophetic Leadership Model: Conceptualizing a Prophet’s Leadership Behaviour, Leader-Follower Mutuality and Altruism to Decision Making Quality

2015 ◽  
Vol 3 (1) ◽  
pp. 93
Author(s):  
Nik Maheran Nik Muhammad
Keyword(s):  
Decision Making ◽  
Social Network ◽  
A Priori ◽  
Complex Function ◽  
Spiritual Leadership ◽  
Leadership Theory ◽  
Future Research ◽  
Leadership Model ◽  
Leadership Behaviour ◽  
Current Leadership

This article advocates that research is lacking on the connection between leadership theory and social network theory. To date, little empirical research has been conducted on leadership and social networks. Thus, the proposition of this article goes beyond traditional leadership models to advocate for a fuller and more integrative focus that is multilevel, multi-component and interdisciplinary, while recognizing that leadership is a complex function of both the organisational leaders and the followers who perform tasks, all of which subsequently leads to decision making qualities. Indeed, the current leadership model focuses on leadership behaviour and the ability to gain followers mutuality, to achieve decision making quality involving the integration of leadership and social network theories. Given the apparent mutable palette of contemporary leadership theory, this emergent construct of the leadership paradigm can expand the poles of the leadership continuum and contribute to a richer and deeper understanding of the relationships and responsibilities of leaders and followers as they relate to decision making qualities. This new construct, which is termed prophetic leadership, explores the literature of the life experiences of the prophet in the ‘Abrahamic Faith’ religion. Drawing on a priori links between the personality trait and spiritual leadership that has recently garnered the interest of scholars, the present study asserts a normative leadership theory that links the personal quality of a leader, posture and principal (based on the Prophet’s leadership behaviour) to synergy and decision making quality. Altruism is proposed to enhance relationships between leadership behaviour and decision making quality. For future research, much work needs to be done specifically aiming to (a) achieve greater clarity of construct definitions, (b) address measurement issues, and (c) avoid construct redundancy.

Prophetic Leadership Model: Conceptualizing a Prophet’s Leadership Behaviour, Leader-Follower Mutuality and Altruism to Decision Making Quality

2015 ◽  
Vol 1 (3) ◽  
pp. 93
Author(s):  
Nik Maheran Nik Muhammad
Keyword(s):  
Decision Making ◽  
Social Network ◽  
A Priori ◽  
Complex Function ◽  
Spiritual Leadership ◽  
Leadership Theory ◽  
Future Research ◽  
Leadership Model ◽  
Leadership Behaviour ◽  
Current Leadership

This article advocates that research is lacking on the connection between leadership theory and social network theory. To date, little empirical research has been conducted on leadership and social networks. Thus, the proposition of this article goes beyond traditional leadership models to advocate for a fuller and more integrative focus that is multilevel, multi-component and interdisciplinary, while recognizing that leadership is a complex function of both the organisational leaders and the followers who perform tasks, all of which subsequently leads to decision making qualities. Indeed, the current leadership model focuses on leadership behaviour and the ability to gain followers mutuality, to achieve decision making quality involving the integration of leadership and social network theories. Given the apparent mutable palette of contemporary leadership theory, this emergent construct of the leadership paradigm can expand the poles of the leadership continuum and contribute to a richer and deeper understanding of the relationships and responsibilities of leaders and followers as they relate to decision making qualities. This new construct, which is termed prophetic leadership, explores the literature of the life experiences of the prophet in the ‘Abrahamic Faith’ religion. Drawing on a priori links between the personality trait and spiritual leadership that has recently garnered the interest of scholars, the present study asserts a normative leadership theory that links the personal quality of a leader, posture and principal (based on the Prophet’s leadership behaviour) to synergy and decision making quality. Altruism is proposed to enhance relationships between leadership behaviour and decision making quality. For future research, much work needs to be done specifically aiming to (a) achieve greater clarity of construct definitions, (b) address measurement issues, and (c) avoid construct redundancy.

Research and analysis of business management processes implemented under conditions of incomplete certainty

2020 ◽  
Author(s):  
Igor Klimenko ◽  
A. Ivlev
Keyword(s):  
Decision Making ◽  
A Priori ◽  
Business Management ◽  
Statistical Uncertainty ◽  
Management Processes ◽  
Classical Decision ◽  
Decision Making Criteria

The study carried out in this work made it possible to expand the rank scale for a priori assessment of the chosen strategy in terms of increasing the sensitivity of assessing the caution / negligence ratio using risky, as well as classical decision-making criteria under conditions of statistical uncertainty.

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