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Choice under Uncertainty: Problems Solved and Unsolved

Mark J. Machina

in The Environment and Emerging Development Issues: Volume 1

Published in print:
2000
Published Online:
September 2007
ISBN:
9780199240692
eISBN:
9780191714269
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780199240692.003.0009
Subject:
Economics and Finance, Development, Growth, and Environmental

This chapter begins with a description of a model of individual choice under uncertainty, namely, the expected utility model of preferences for lotteries. A number of problems are examined from the ... More


Downside Potential Under Risk: The Allais Paradox and Its Conflicting Interpretations

Eric Barthalon

in Uncertainty, Expectations, and Financial Instability: Reviving Allais's Lost Theory of Psychological Time

Published in print:
2014
Published Online:
November 2015
ISBN:
9780231166287
eISBN:
9780231538305
Item type:
chapter
Publisher:
Columbia University Press
DOI:
10.7312/columbia/9780231166287.003.0010
Subject:
Economics and Finance, Behavioural Economics

This chapter focuses on the psychological importance of downside risk by presenting Maurice Allais's paradox and by contrasting how Allais and prospect theory have interpreted this paradox. It also ... More


 Accounting for Tastes

Ken Binmore

in Playing for Real: Game Theory

Published in print:
2007
Published Online:
May 2007
ISBN:
9780195300574
eISBN:
9780199783748
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780195300574.003.0004
Subject:
Economics and Finance, Microeconomics

This chapter explains the meaning of the payoffs that are used to quantify the outcomes of games. The theory of revealed preference assumes only that players are consistent. With appropriate ... More


The Second Challenge: Individuating Outcomes

José Luis Bermúdez

in Decision Theory and Rationality

Published in print:
2009
Published Online:
May 2009
ISBN:
9780199548026
eISBN:
9780191720246
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780199548026.003.0004
Subject:
Philosophy, Philosophy of Mind, Philosophy of Science

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 ... More


Measuring Utility, Destabilizing EUT: Behavioral Economics Begins, 1965–1985

Ivan Moscati

in Measuring Utility: From the Marginal Revolution to Behavioral Economics

Published in print:
2018
Published Online:
December 2018
ISBN:
9780199372768
eISBN:
9780199372805
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780199372768.003.0017
Subject:
Economics and Finance, Microeconomics

Chapter 16 shows how the validity of expected utility theory (EUT) was increasingly called into question between the mid-1960s and the mid-1970s and discusses how a series of experiments performed ... More


Conclusion

André Orléan

in The Empire of Value: A New Foundation for Economics

Published in print:
2014
Published Online:
January 2015
ISBN:
9780262026970
eISBN:
9780262323901
Item type:
chapter
Publisher:
The MIT Press
DOI:
10.7551/mitpress/9780262026970.003.0011
Subject:
Economics and Finance, Financial Economics

The orthodox belief that economic systems fundamentally differ from other social systems by virtue of the self-regulating properties of competition and the countervailing forces it automatically ... More


Alternative Preferences

Kerry E. Back

in Asset Pricing and Portfolio Choice Theory

Published in print:
2017
Published Online:
May 2017
ISBN:
9780190241148
eISBN:
9780190241179
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780190241148.003.0025
Subject:
Economics and Finance, Financial Economics

The Allais and Ellsberg paradoxes are presented. Various generalizations of expected utility motivated by these and other paradoxes are discussed, including betweenness preferences, rank‐dependent ... More


Decision Theory

Michael G. Titelbaum

in Fundamentals of Bayesian Epistemology 2: Arguments, Challenges, Alternatives

Published in print:
2022
Published Online:
May 2022
ISBN:
9780192863140
eISBN:
9780191954092
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780192863140.003.0007
Subject:
Philosophy, Metaphysics/Epistemology

This chapter begins by introducing the notions of mathematical expectation and utility. Then we explain how expected utility theory connects preference rankings to credence and utilities. We develop ... More


Rational Management of Risks

Paul Weirich

in Rational Responses to Risks

Published in print:
2020
Published Online:
August 2020
ISBN:
9780190089412
eISBN:
9780190089443
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780190089412.003.0006
Subject:
Philosophy, Logic/Philosophy of Mathematics

The literature on expected utility formulates in two ways the principle to maximize expected utility. One version of the principle requires choices that literally maximize expected utility. The other ... More


Actions, Preferences, and Risk

Sergio Tenenbaum

in Rational Powers in Action: Instrumental Rationality and Extended Agency

Published in print:
2020
Published Online:
October 2020
ISBN:
9780198851486
eISBN:
9780191886096
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780198851486.003.0009
Subject:
Philosophy, General

Formal theories of instrumental rationality, such as orthodox decision theory, often provide a powerful account of the rationality of choice under risk. Can the extended theory of instrumental ... More


Combinations of Acts

Paul Weirich

in Rational Responses to Risks

Published in print:
2020
Published Online:
August 2020
ISBN:
9780190089412
eISBN:
9780190089443
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780190089412.003.0007
Subject:
Philosophy, Logic/Philosophy of Mathematics

Combining acts combines their risks. Their risks are not additive, either using their sizes or their intrinsic utilities. This creates the possibility of hedging, that is, adopting a risk to lower ... More


Twenty-Five Centuries of Debate: A Short History of Decision-Making

Thomas Boraud

in How the Brain Makes Decisions

Published in print:
2020
Published Online:
November 2020
ISBN:
9780198824367
eISBN:
9780191863202
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/oso/9780198824367.003.0001
Subject:
Neuroscience, Behavioral Neuroscience

This chapter traces the history of decision-making and rationality in Western culture. Despite the fact that the concept of rationality has been tackled by philosophers since early Greek antiquity, ... More


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