Which preferences shall be the basis of rational decision

Introduction to Formal Philosophy, 2018

Preferences and choices have central roles in moral philosophy, economics, and the decision sciences in general. In a formal language we can express and explore the properties of preferences, choices, and their interrelations in a precise way, and uncover connections that are inaccessible without formal tools. In this chapter, the plausibility of different such properties is discussed, and it is shown how close attention to the logical details can help dissolve some apparent paradoxes in informal and semi-formal treatments.

Erkenntnis, 2000

This is a collection of essays on the concept and role of preferences and desires in practical reasoning. The major part of the book consists of thirteen full-length articles, to each of which is appended a shorter reply or discussion. The coverage is impressive. Many, if not most, of the major preference-related issues in both moral philosophy and decision theory are discussed in depth in this volume. The list of authors is no less impressive. Among the 33 contributors are found many leading scholars in their respective fields of research.

The decision-making process is a process explored by many different disciplines and handled in many different ways. This process, which is also the subject of economics, is discussed in terms of rationality criterion in economic literature. Some models considered that the decision-maker is rational, however some models rejected rationality. In this study, decision making theories are discussed in terms of rationality, and the Game Theory, which is a phenomenon, has been explained.

The purpose of this methodological note is to illustrate how Rational Choice Theory (RCT) is a powerful tool for understanding many social scientific problems. I begin by outlining what I perceive to be the best and most basic understanding of RCT, while also attempting to clarify several erroneous interpretations of what the approach entails. In the second section, I take a closer look at the explanatory logic that RCT engages in and provide a number of brief examples to demonstrate its analytic power. In the third section, I advocate the value of combining RCT forms of ‘micro-explanations’ with alternative explanations premised upon what might be called ‘holistic’ or ‘structuralist’ forms of reasoning. To illustrate, I identify several Marxist and ‘functionally-orientated’ explanations that are, taken in isolation, unsatisfactory.

Preference Change, 2009

In this paper we consider preference over objects. We show how this preference can be derived from priorities, properties of these objects, a concept which is initially from optimality theory. We do this both in the case when an agent has complete information and in the case when an agent only has beliefs about the properties. After the single agent case we also consider the multi-agent case. In each of these cases, we construct preference logics, some of them extending the standard logic of belief. This leads to interesting connections between preference and beliefs. We strengthen the usual completeness results for logics of this kind to representation theorems. The representation theorems describe the reasoning that is valid for preference relations that have been obtained from priorities. In the multi-agent case, these representation theorems are strengthened to the special cases of cooperative and competitive agents. We study preference change with regard to changes of the priority sequence, and change of beliefs. We apply the dynamic epistemic logic approach, and in consequence reduction axioms are presented. We conclude with some possible directions for future work.

2009

Decision Theory and Rationality Abstract The concept of rationality is a common thread through the human and social sciences-from political science to philosophy, from economics to sociology, from management science to decision analysis. But what counts as rational action and rational behavior? This book explores decision theory as a theory of rationality. Decision theory is the mathematical theory of choice and for many social scientists it makes the concept of rationality mathematically tractable and scientifically legitimate. Yet rationality is a concept with several dimensions and the theory of rationality has different roles to play. It plays an action-guiding role (prescribing what counts as a rational solution of a given decision problem). It plays a normative role (giving us the tools to pass judgment not just on how a decision problem was solved, but also on how it was set up in the first place). And it plays a predictive/explanatory role (telling us how rational agents will behave, or why they did what they did). This controversial but accessible book shows, first, that decision theory cannot play all of these roles simultaneously and, second, that no theory of rationality can play one role without playing the other two. The conclusion is that there is no hope of taking decision theory as a theory of rationality. Book keywords Rationality Decision theory Utility Preference Choice Chapter 1 Decision theory and the dimensions of rationality Abstract This chapter begins by explaining the different explanatory projects underlying the three different dimensions of rationality (action-guiding; normative assessment; and explanatory-predictive). It then introduces the basic elements of decision theory and shows how it can serve as a theory of deliberation. It goes on to explore how, at least ion first appearances, decision theory might be employed in the projects of normative assessment and explanation/prediction. Doing this reveals three basic challenges that decision theory must confront if it is to serve as a theory of rationality. These challenges set the agenda for the main part of the book (Chapters 2 – 4). Chapter 1 keywords Theory of choice Decision-making under risk Decision-making under uncertainty Decision making under certainty Representation theorems Chapter 2 The first challenge: Making sense of utility and preference Abstract This chapter explores how the different dimensions of rationality impose conflicting requirements and constraints upon the central notions of decision theory – the notions of utility and preference. It begins by considering the operational understanding of utility dominant in economics, according to which utility is a measure of preference (as revealed in choice). It goes on to explore different alternatives to the operational understanding. The first alternative is to develop a richer notion of preference (as in Gauthier’s theory of considered preferences). The second alternative is to reject preference as the central notion in decision theory (as in Broome’s analysis of utility in terms of goodness). It turns out that no strategy works for all three of the explanatory projects. Chapter 2 keywords Utility Preference Revealed preference Goodness Chapter 3 The second challenge: Individuating outcomes Abstract Standard presentations of decision theory adopt some version of the invariance principle (that it is irrational to assign different utilities to propositions known to be equivalent). This normative principle raises problems for the idea that decision theory can serve as a theory of motivation. Frederic Schick has responded to this tension by proposing an intensional version of decision theory that allows a single outcome to be understood in different ways (and utilities to be assigned accordingly). This raises problems (such as the failure of the expected utility theorem) that can be dealt with by a more fine-grained way of individuating outcomes (as in Broome’s theory of individuation by justifiers). Again, though, none of these strategies serves all three of the explanatory projects under consideration. Chapter 3 keywords Invariance principle Intensionality Framing effects Substitution axiom (sure-thing principle) Allais paradox Chapter 4 The third challenge: Rationality over time Abstract This chapter explores the challenge of developing decision theory to do justice to the sequential and diachronic nature of decision making. Classical decision theory is governed by a separability principle according to which deliberation at a time is answerable only to the agent’s utility function at that time. This opens the door to forms of sequential inconsistency in which an agent makes a plan and then fails to carry it through in what is often called myopic choice. Decision theorists have proposed a number of ways of dealing with sequential inconsistency. These include models of sophisticated choice, resolute choice, and rational preference change. Each model works for some of the explanatory projects associated with the different dimensions of rationality, but none works for all. Chapter 4 keywords Sequential inconsistency Myopic choice Sophisticated choice Resolute choice Separability principle Substitution axiom (sure-thing principle) Chapter 5 Rationality: Crossing the fault lines? Abstract This chapter explores the relation between the different dimensions of rationality. Previous chapters have argued that decision theory cannot developed in a way that will satisfy the requirements of all three dimensions of rationality. This chapter assess the prospects for taking decision theory to be a theory of rationality in just one of the three dimensions. It evaluates Pettit’s claim that decision theory provides a normative canon of rationality, but not a deliberative calculus of rationality, as well as Kahneman and Tversky’s proposal to use prospect theory as a explanatory-predictive complement to decision theory. The upshot of the chapter is that the three dimensions of rationality cannot be separated out. Chapter 5 keywords Prospect theory Belief-desire law Folk psychology Reasoning heuristics

Economic Theory, 2018

We study a decision maker characterized by two binary relations. The …rst re ‡ects his judgments about well-being, his mental preferences. The second describes the decision maker's choice behavior, his behavioral preferences. We propose axioms that describe a relation between these two preferences, so between mind and behavior, thus disentangling two di¤erent perspectives on preferences: a description of tastes (and attitudes) and a way to organize behavioral data. We obtain two representations: one in which mental preferences uniquely determine choice behavior, another for which mental preferences direct behavior but room remains for biases and framing e¤ects. Our results also provide a foundation for a decision analysis procedure called robust ordinal regression and proposed by Greco, Mousseau, and S÷ owiński (2008).

2009

This book provides an overview of issues arising in work on the foundations of decision theory and social choice over the past three decades. Drawing on work by economic theorists mainly, but also with contributions from political science, philosophy, and psychology, the collection shows how the related areas of decision theory and social choice have developed in their applications and moved well beyond the basic models of expected utility and utilitarian approaches to welfare economics. Containing twenty‐three contributions, in many cases by leading figures in their fields, this book shows how the normative foundations of economics have changed dramatically as more general and explicit models of utility and group choice have been developed. This is perhaps the first time these developments have been brought together in a manner that seeks to identify and make accessible the recent themes and developments that have been of particular interest to researchers in recent years.