Expected utility theory, Jeffrey’s decision theory, and the paradoxes

In Richard Bradley’s book, Decision Theory with a Human Face, we have selected two themes for discussion. The first is the Bolker-Jeffrey theory of decision, which the book uses throughout as a tool to reorganize the whole field of decision theory, and in particular to evaluate the extent to which expected utility theories may be normatively too demanding. The second theme is the redefinition strategy that can be used to defend EU theories against the Allais and Ellsberg paradoxes, a strategy that the book by and large endorses, and even develops in an original way concerning the Ellsberg paradox. We argue that the BJ theory is too specific to fulfil Bradley’s foundational project and that the redefinition strategy fails in both the Allais and Ellsberg cases. Although we share Bradley’s conclusion that EU theories do not state universal rationality requirements, we reach it not by a comparison with BJ theory, but by a comparison with the non-EU theories that the paradoxes have heuristically suggested

Interpersonal Comparisons of What?

I examine the once popular claim according to which interpersonal comparisons of welfare are necessary for social choice. I side with current social choice theorists in emphasizing that, on a narrow construal, this necessity claim is refuted beyond appeal. However, I depart from the opinion presently prevailing in social choice theory in highlighting that on a broader construal, this claim proves not only compatible with, but even comforted by, the current state of the field. I submit that all in all, the most accurate philosophical assessment consists not in flatly rejecting this necessity claim, but in accepting it in suitably revised form

Expected Utility in 3D

Consider a subjective expected utility preference relation. It is usually held that the representations which this relation admits differ only in one respect, namely, the possible scales for the measurement of utility. In this paper, I discuss the fact that there are, metaphorically speaking, two additional dimensions along which infinitely many more admissible representations can be found. The first additional dimension is that of state-dependence. The second—and, in this context, much lesser-known—additional dimension is that of act-dependence. The simplest implication of their usually neglected existence is that the standard axiomatizations of subjective expected utility fail to provide the measurement of subjective probability with satisfactory behavioral foundations

The Sure-Thing Principle

The Sure-Thing~Principle famously appears in Savage's axiomatization of Subjective Expected Utility. Yet Savage introduces it only as an informal, overarching dominance condition motivating his separability postulate P2 and his state-independence postulate P3. Once these axioms are introduced, by and large, he does not discuss the principle any more. In this note, we pick up the analysis of the Sure-Thing~Principle where Savage left it. In particular, we show that each of P2 and P3 is equivalent to a dominance condition; that they strengthen in different directions a common, basic dominance axiom; and that they can be explicitly combined in a unified dominance condition that is a candidate formal statement for the Sure-Thing~Principle. Based on elementary proofs, our results shed light on some of the most fundamental properties of rational choice under uncertainty. In particular they imply, as corollaries, potential simplifications for Savage's and the Anscombe-Aumann axiomatizations of Subjective Expected Utility. Most surprisingly perhaps, they reveal that in Savage's axiomatization, P3 can be weakened to a natural strengthening of so-called Obvious Dominance

Moral Hazard, the Savage Framework, and State-Dependent Utility

International audienceIn this paper, I investigate the betting behavior of a decision-maker who can influence the likelihood of the events upon which she is betting. In decision theory, this is best known as a situation of moral hazard. Focusing on a particularly simple case, I sketch the first systematic analysis of moral hazard in the canonical Savage framework. From the results of this analysis, I draw two philosophical conclusions. First, from an observational and a descriptive point of view, there need to be no incompatibility between moral hazard and the Savage framework. This qualifies the incompatibility view, that is ubiquitous in decision theory. Second, in general, moral hazard is not sufficient to overcome the challenges posed by state-dependent utility to the behav-ioral identification of beliefs. This qualifies the sufficiency view, that is influential in decision theory. These two philosophical conclusions are the main contributions of my paper

Le comportement et le concept de choix

International audienceCette note examine la partie conceptuelle d’un article de Sen, «Internal Consistency of Choice». Elle isole deux thèses parmi celles que Sen défend. Unepremière, négative, est qu’aucune condition formelle de cohérence du choix n’est normativement valable sans exception. Une seconde, positive, est qu’une condition formelle de cohérence du choix n’est normativement valable que sous des suppositions faisant intervenir la préférence. Nous procédons à une analyse détaillée des choix énigmatiques dont Sen prend argument et affirmons que cet examen mène à remettre en cause la thèse négative, mais d’une manière subtile qui confirme — même renforce — la thèse positive

Support for Geometric Pooling

Supra-Bayesianism is the Bayesian response to learning the opinions of others. Probability pooling constitutes an alternative response. One natural question is whether there are cases where probability pooling gives the supra-Bayesian result. This has been called the problem of Bayes-compatibility for pooling functions. It is known that in a common prior setting, under standard assumptions, linear pooling cannot be non-trivially Bayes-compatible. We show by contrast that geometric pooling can be non-trivially Bayes-compatible. Indeed, we show that, under certain assumptions, geometric and Bayes-compatible pooling are equivalent. Granting supra-Bayesianism its usual normative status, one upshot of our study is thus that, in a certain class of epistemic contexts, geometric pooling enjoys a normative advantage over linear pooling as a social learning mechanism. We discuss the philosophical ramifications of this advantage, which we show to be robust to variations in our statement of the Bayes-compatibility problem

Beyond the Metrological Viewpoint

The representational theory of measurement (RTM) has long been the central paradigm in the philosophy of measurement. Such is not the case anymore, partly under the influence of the critique according to which RTM offers too poor descriptions of the measurement procedures actually followed in science. This can be called the metrological critique of RTM. I claim that the critique is partly irrelevant. This is because, in general, RTM is not in the business of describing measurement procedures, be it in idealized form. To support this claim, I present various cases where RTM can be said to investigate measurement without providing any measurement procedure. Such limit cases lead to a better understanding of the RTM project. They also illustrate some of the questions which the philosophy of measurement can explore, when it is ready to go beyond the metrological viewpoint