Shareholder Inspection Rights: From Credible Basis to Rational Belief

Jurisdictions are split on the standard of proof for shareholder inspection lawsuits when inspections are for the purpose of investigating managerial misconduct. Delaware and its followers apply a credible basis standard that calls for extrinsic evidence, beyond mere suspicion, curiosity, or disagreement with management, to permit an inference of misconduct. A minority of jurisdictions require shareholders to show merely a rational belief that mismanagement likely happened. Rational belief can be satisfied by sound logic without referencing extrinsic evidence. The Delaware Supreme Court rejected rational belief for fear that a permissive standard would lead to a cascade of frivolous inspections, although numerous factors suggest otherwise. This paper offers the first empirical verification of the court’s assumption. The Delaware Supreme Court also dismissed shareholders’ argument that credible basis was an insurmountable obstacle to their exercise of statutory inspection rights, reasoning that the standard had only barred inspections in a couple of cases out of a “myriad” of inspection lawsuits. This paper is the first to offer empirical evidence that the court grossly underestimated the deterrence effect of credible basis. The paper shows that both the evil of frivolous lawsuits under rational basis and the evil of over-deterrence under credible basis exist, but the latter overshadows the former in magnitude. The paper suggests that the court adopts rational belief for inspection lawsuits against private companies where credible basis poses the biggest problem, and simultaneously implements cost-shifting for inspections items that impose an onerous burden on the target corporation

Classical logic, argument and dialectic

A well studied instantiation of Dung's abstract theory of argumentation yields argumentation-based characterisations of non-monotonic inference over possibly inconsistent sets of classical formulae. This provides for single-agent reasoning in terms of argument and counter-argument, and distributed non-monotonic reasoning in the form of dialogues between computational and/or human agents. However, features of existing formalisations of classical logic argumentation (Cl-Arg) that ensure satisfaction of rationality postulates, preclude applications of Cl-Arg that account for real-world dialectical uses of arguments by resource-bounded agents. This paper formalises dialectical classical logic argumentation that both satisfies these practical desiderata and is provably rational. In contrast to standard approaches to Cl-Arg we: 1) draw an epistemic distinction between an argument's premises accepted as true, and those assumed true for the sake of argument, so formalising the dialectical move whereby arguments\u2019 premises are shown to be inconsistent, and avoiding the foreign commitment problem that arises in dialogical applications; 2) provide an account of Cl-Arg suitable for real-world use by eschewing the need to check that an argument's premises are subset minimal and consistent, and identifying a minimal set of assumptions as to the arguments that must be constructed from a set of formulae in order to ensure that the outcome of evaluation is rational. We then illustrate our approach with a natural deduction proof theory for propositional classical logic that allows measurement of the \u2018depth\u2019 of an argument, such that the construction of depth-bounded arguments is a tractable problem, and each increase in depth naturally equates with an increase in the inferential capabilities of real-world agents. We also provide a resource-bounded argumentative characterisation of non-monotonic inference as defined by Brewka's Preferred Subtheories

The rational status of quantum cognition

Classic probability theory (CPT) is generally considered the rational way to make inferences, but there have been some empirical findings showing a divergence between reasoning and the principles of classical probability theory (CPT), inviting the conclusion that humans are irrational. Perhaps the most famous of these findings is the conjunction fallacy (CF). Recently, the CF has been shown consistent with the principles of an alternative probabilistic framework, quantum probability theory (QPT). Does this imply that QPT is irrational or does QPT provide an alternative interpretation of rationality? Our presentation consists of three parts. First, we examine the putative rational status of QPT using the same argument as used to establish the rationality of CPT, the Dutch Book (DB) argument, according to which reasoners should not commit to bets guaranteeing a loss. We prove the rational status of QPT by formulating it as a particular case of an extended form of CPT, with separate probability spaces produced by changing context. Second, we empirically examine the key requirement for whether a CF can be rational or not; the results show that participants indeed behave rationally, at least relative to the representations they employ. Finally, we consider whether the conditions for the CF to be rational are applicable in the outside (non-mental) world. Our discussion provides a general and alternative perspective for rational probabilistic inference, based on the idea that contextuality requires either reasoning in separate CPT probability spaces or reasoning with QPT principles

Pushing the bounds of rationality: Argumentation and extended cognition

One of the central tasks of a theory of argumentation is to supply a theory of appraisal: a set of standards and norms according to which argumentation, and the reasoning involved in it, is properly evaluated. In their most general form, these can be understood as rational norms, where the core idea of rationality is that we rightly respond to reasons by according the credence we attach to our doxastic and conversational commitments with the probative strength of the reasons we have for them. Certain kinds of rational failings are so because they are manifestly illogical – for example, maintaining overtly contradictory commitments, violating deductive closure by refusing to accept the logical consequences of one’s present commitments, or failing to track basing relations by not updating one’s commitments in view of new, defeating information. Yet, according to the internal and empirical critiques, logic and probability theory fail to supply a fit set of norms for human reasoning and argument. Particularly, theories of bounded rationality have put pressure on argumentation theory to lower the normative standards of rationality for reasoners and arguers on the grounds that we are bounded, finite, and fallible agents incapable of meeting idealized standards. This paper explores the idea that argumentation, as a set of practices, together with the procedures and technologies of argumentation theory, is able to extend cognition such that we are better able to meet these idealized logical standards, thereby extending our responsibilities to adhere to idealized rational norms

The Coherence of Empiricism

Rationalists often argue that empiricism is incoherent and conclude, on that basis, that some knowledge is a priori. I contend that such arguments against empiricism cannot be parlayed into an argument in support of the a priori since rationalism is open to the same arguments. I go on to offer an alternative strategy. The leading idea is that, instead of offering a priori arguments against empiricism, rationalists should marshal empirical support for their position

(WP 2018-02) Extending Behavioral Economics’ Methodological Critique of Rational Choice Theory to Include Counterfactual Reasoning

This paper extends behavioral economics’ realist methodological critique of rational choice theory to include the type of logical reasoning underlying its axiomatic foundations. A purely realist critique ignores Kahneman’s emphasis on how the theory’s axiomatic foundations make it normative. I extend his critique to the theory’s reliance on classical logic, which excludes the concept of possibility employed in counterfactual reasoning. Nudge theory reflects this in employing counterfactual conditionals. This answers the complaint that the Homo sapiens agent conception ultimately reduces to a Homo economicus conception, and also provides grounds for treating Homo sapiens as an adaptive, non-optimizing, reflexive agent

The Bayesian boom: good thing or bad?

A series of high-profile critiques of Bayesian models of cognition have recently sparked controversy. These critiques question the contribution of rational, normative considerations in the study of cognition. The present article takes central claims from these critiques and evaluates them in light of specific models. Closer consideration of actual examples of Bayesian treatments of different cognitive phenomena allows one to defuse these critiques showing that they cannot be sustained across the diversity of applications of the Bayesian framework for cognitive modeling. More generally, there is nothing in the Bayesian framework that would inherently give rise to the deficits that these critiques perceive, suggesting they have been framed at the wrong level of generality. At the same time, the examples are used to demonstrate the different ways in which consideration of rationality uniquely benefits both theory and practice in the study of cognition

Informal fallacies as cognitive heuristics in public health reasoning

The public must make assessments of a range of health-related issues. However, these assessments require scientific knowledge which is often lacking or ineffectively utilized by the public. Lay people must use whatever cognitive resources are at their disposal to come to judgement on these issues. It will be contended that a group of arguments - so-called informal fallacies - are a valuable cognitive resource in this regard. These arguments serve as cognitive heuristics which facilitate reasoning when knowledge is limited or beyond the grasp of reasoners. The results of an investigation into the use of these arguments by the public are reported

The Rationalities of Emotion

I argue that emotions are not only rational in-themselves, strictly speaking, but they are also instrumentally rational, epistemically rational, and evaluatively rational. I begin with a discussion of what it means for emotions to be rational or irrational in-themselves, which includes the derivation of a criterion for the ontological rationality of emotions (CORe): For emotion or an emotion there exists some normative standard that is given by what emotion or an emotion is against which our emotional responses can be judged or evaluated in virtue of the fact that our emotions manifest our rationality. I conclude with a brief discussion of the implications of this account

Epistemic Modal Credence

Triviality results threaten plausible principles governing our credence in epistemic modal claims. This paper develops a new account of modal credence which avoids triviality. On the resulting theory, probabilities are assigned not to sets of worlds, but rather to sets of information state-world pairs. The theory avoids triviality by giving up the principle that rational credence is closed under conditionalization. A rational agent can become irrational by conditionalizing on new evidence. In place of conditionalization, the paper develops a new account of updating: conditionalization with normalization