Duhemian Themes in Expected Utility Theory

This monographic chapter explains how expected utility (EU) theory arose in von Neumann and Morgenstern, how it was called into question by Allais and others, and how it gave way to non-EU theories, at least among the specialized quarters of decion theory. I organize the narrative around the idea that the successive theoretical moves amounted to resolving Duhem-Quine underdetermination problems, so they can be assessed in terms of the philosophical recommendations made to overcome these problems. I actually follow Duhem's recommendation, which was essentially to rely on the passing of time to make many experiments and arguments available, and evebntually strike a balance between competing theories on the basis of this improved knowledge. Although Duhem's solution seems disappointingly vague, relying as it does on "bon sens" to bring an end to the temporal process, I do not think there is any better one in the philosophical literature, and I apply it here for what it is worth. In this perspective, EU theorists were justified in resisting the first attempts at refuting their theory, including Allais's in the 50s, but they would have lacked "bon sens" in not acknowledging their defeat in the 80s, after the long process of pros and cons had sufficiently matured. This primary Duhemian theme is actually combined with a secondary theme - normativity. I suggest that EU theory was normative at its very beginning and has remained so all along, and I express dissatisfaction with the orthodox view that it could be treated as a straightforward descriptive theory for purposes of prediction and scientific test. This view is usually accompanied with a faulty historical reconstruction, according to which EU theorists initially formulated the VNM axioms descriptively and retreated to a normative construal once they fell threatened by empirical refutation. From my historical study, things did not evolve in this way, and the theory was both proposed and rebutted on the basis of normative arguments already in the 1950s. The ensuing, major problem was to make choice experiments compatible with this inherently normative feature of theory. Compability was obtained in some experiments, but implicitly and somewhat confusingly, for instance by excluding overtly incoherent subjects or by creating strong incentives for the subjects to reflect on the questions and provide answers they would be able to defend. I also claim that Allais had an intuition of how to combine testability and normativity, unlike most later experimenters, and that it would have been more fruitful to work from his intuition than to make choice experiments of the naively empirical style that flourished after him. In sum, it can be said that the underdetermination process accompanying EUT was resolved in a Duhemian way, but this was not without major inefficiencies. To embody explicit rationality considerations into experimental schemes right from the beginning would have limited the scope of empirical research, avoided wasting resources to get only minor findings, and speeded up the Duhemian process of groping towards a choice among competing theories

Teaching Access, or Freedom of Information Law

Based on the author\u27s experience developing and administering the course and materials, this article provides an introduction and resources to teach a graduate journalism or professional law school course on access to government, commonly called freedom of information law , which may be constructed as a capstone course in law school. The appendices provide supporting material and references

The pricing effects of ambiguous private information

When private information is observed by ambiguity averse investors, asset prices may be informationally inefficient in rational expectations equilibrium. This inefficiency implies lower asset prices as uninformed investors require a premium to hold assets and higher return volatility relative to informationally efficient benchmarks. Moreover, asset returns are negatively skewed and may be leptokurtic. Inefficiency also leads to amplification in price of small changes in news, relative to informationally efficient benchmarks. Public information affects the nature of unrevealed private information and the informational inefficiency of prices. Asset prices may be lower (higher) with good (bad) public information

A Multi-Objective Decision Framework for Lifecycle Investment

In this paper we propose a multi-objective decision framework for lifecycle investment choice. Instead of optimizing individual strategies with respect to a single-valued objective, we suggest evaluation of classes of strategies in terms of the quality of the tradeoffs that they provide. The proposed framework takes inspiration from psychological theories which, on the one hand, assert that humans analyze risky choice situations in terms of several competing factors, and, on the other hand, recognize that attribute overload is detrimental to decision making. In particular, we use SP/A (security-potential/aspiration) theory as developed by Lopes and co-authors. The proposed approach is illustrated in a simple lifecycle model. As decision factors, we consider (a) the contribution paid, (b) the ambition level (targeted level of retirement income), and (c) the guarantee level (a level of retirement income that will be achieved with high probability). In terms of the tradeoffs generated between these indices, we compare a class of traditional lifecycle strategies, defined in terms of a glide path, with a class of so called collar strategies

Dynamic Choice under Ambiguity

This paper analyzes sophisticated dynamic choice for ambiguity-sensitive decision makers. It characterizes Consistent Planning via axioms on preferences over decision trees. Furthermore, it shows how to elicit conditional preferences from prior preferences. The key axiom is a weakening of Dynamic Consistency, deemed Sophistication. The analysis accommodates arbitrary decision models and updating rules. Hence, the results indicate that (i) ambiguity attitudes, (ii) updating rules, and (iii) sophisticated dynamic choice are mutually orthogonal aspects of preferences. As an example, a characterization of prior-by-prior Bayesian updating and Consistent Planning for arbitrary maxmin-expected utility preferences is presented. The resulting sophisticated MEU preferences are then used to analyze the value of information under ambiguity; a basic trade-off between information acquisition and commitment is highlighted

Effects of interpersonal violence-related post-traumatic stress disorder (PTSD) on mother and child diurnal cortisol rhythm and cortisol reactivity to a laboratory stressor involving separation

Women who have experienced interpersonal violence (IPV) are at a higher risk to develop posttraumatic stress disorder (PTSD), with dysregulation of the hypothalamic-pituitary-adrenal (HPA) axis and impaired social behavior. Previously, we had reported impaired maternal sensitivity and increased difficulty in identifying emotions (i.e. alexithymia) among IPV-PTSD mothers. One of the aims of the present study was to examine maternal IPV-PTSD salivary cortisol levels diurnally and reactive to their child’s distress in relation to maternal alexithymia. Given that mother-child interaction during infancy and early childhood has important long-term consequences on the stress response system, toddlers’ cortisol levels were assessed during the day and in response to a laboratory stressor. Mothers collected their own and their 12-48 month-old toddlers’ salivary samples at home three times: 30 min after waking up, between 2-3 pm and at bedtime. Moreover, mother-child dyads articipated in a 120-min laboratory session, consisting of 3 phases: baseline, stress situation (involving mother-child separation and exposure to novelty) and a 60-min regulation phase. Compared to non-PTSD controls, IPV-PTSD mothers -but not their toddlers-, had lower morning cortisol and higher bedtime cortisol levels. As expected, IPV-PTSD mothers and their children showed blunted cortisol reactivity to the laboratory stressor. Maternal cortisol levels were negatively correlated to difficulty in identifying emotions. Our data highlights PTSDIPV-related alterations in the HPA system and its relevance to maternal behavior. Toddlers of IPV-PTSD mothers also showed an altered pattern of cortisol reactivity to stress that potentially may predispose them to later psychological disorders