Extending the original position : revisiting the Pattanaik critique of Vickrey/Harsanyi utilitarianism

Harsanyi's original position treats personal identity, upon which each individual's utility depends, as risky. Pattanaik's critique is related to the problem of scaling "state-dependent" von Neumann-Morgenstern utility when determining subjective probabilities. But a unique social welfare functional, incorporating both level and unit interpersonal comparisons, emerges from contemplating an "extended" original position allowing the probability of becoming each person to be chosen. Moreover, the paper suggests the relevance of a "Harsanyi ethical type space", with types as both causes and objects of preference

Error evaluation for difference approximations to ordinary differential equations

Method involves relationships between errors introduced by using finite sampling rates and parameters describing specific numerical method used. Procedurre is used in design and analysi of digital filters and simulators

Isolation, Assurance and Rules : Can Rational Folly Supplant Foolish Rationality?

Consider an “isolation paradox” game with many identical players. By definition, conforming to a rule which maximizes average utility is individually a strictly dominated strategy. Suppose, however, that some players think “quasi-magically” in accordance with evidential (but not causal) decision theory. That is, they act as if others’ disposition to conform, or not, is affected by their own behavior, even though they do not actually believe there is a causal link. Standard game theory excludes this. Yet such “rational folly” can sustain “rule utilitarian” cooperative behavior. Comparisons are made with Newcomb’s problem, and with related attempts to resolve prisoner’s dilemma.

History : Sunk Cost, or Widespread Externality?

In an intertemporal Arrow-Debreu economy with a continuum of agents, suppose that the auctioneer sets prices while the government institutes optimal lump-sum transfers period by period. An earlier paper showed how subgame imperfections arise because agents understand how their current decisions such as those determining investment will influence future lump-sum transfers. This observation undermines the second efficiency theorem of welfare economics and makes “history” a widespread externality. A two-period model is used to investigate the constrained efficiency properties of different kinds of equilibrium. Possibilities for remedial policy are also discussed.

Laboratory Games and Quantum Behaviour: The Normal Form with a Separable State Space

The subjective expected utility (SEU) criterion is formulated for a particular four-person “laboratory game” that a Bayesian rational decision maker plays with Nature, Chance, and an Experimenter who influences what quantum behaviour is observable by choosing an orthonormal basis in a separable complex Hilbert space of latent variables. Nature chooses a state in this basis, along with an observed data series governing Chance's random choice of consequence. When Gleason's theorem holds, imposing quantum equivalence implies that the expected likelihood of any data series w.r.t. prior beliefs equals the trace of the product of appropriate subjective density and likelihood operators.

Beyond Normal Form Invariance : First Mover Advantage in Two-Stage Games with or without Predictable Cheap Talk

Von Neumann (1928) not only introduced a fairly general version of the extensive form game concept. He also hypothesized that only the normal form was relevant to rational play. Yet even in Battle of the Sexes, this hypothesis seems contradicted by players' actual behaviour in experiments. Here a refined Nash equilibrium is proposed for games where one player moves first, and the only other player moves second without knowing the first move. The refinement relies on a tacit understanding of the only credible and straightforward perfect Bayesian equilibrium in a corresponding game allowing a predictable direct form of cheap talk.

Migration with local public goods and the gains from changing places

Without public goods and under fairly standard assumptions, in Hammond and Sempere (J Pub Econ Theory, 8: 145–170, 2006) we show that freeing migration enhances the potential Pareto gains from free trade. Here, we present a generalization allowing local public goods subject to congestion. Unlike the standard literature on fiscal externalities, our result relies on fixing both local public goods and congestion levels at their status quo values. This allows constrained efficient and potentially Pareto improving population exchanges regulated only through appropriate residence charges, which can be regarded as Pigouvian congestion taxes

Rationality and dynamic consistency under risk and uncertainty

For choice with deterministic consequences, the standard rationality hypothesis is ordinality - i.e., maximization of a weak preference ordering. For choice under risk (resp. uncertainty), preferences are assumed to be represented by the objectively (resp. subjectively) expected value of a von Neumann{Morgenstern utility function. For choice under risk, this implies a key independence axiom; under uncertainty, it implies some version of Savage's sure thing principle. This chapter investigates the extent to which ordinality, independence, and the sure thing principle can be derived from more fundamental axioms concerning behaviour in decision trees. Following Cubitt (1996), these principles include dynamic consistency, separability, and reduction of sequential choice, which can be derived in turn from one consequentialist hypothesis applied to continuation subtrees as well as entire decision trees. Examples of behavior violating these principles are also reviewed, as are possible explanations of why such violations are often observed in experiments