Ebook: Risk, Decision and Rationality

Decision Theory has considerably developed in the late 1970's and the 1980's. The evolution has been so fast and far-r2aching that it has become increasingly difficult to keep track of the new state of the art. After a decade of new contributions, there was a need for an overview' of the field. This book is intended to fill the gap. The reader will find here thirty~nine selected papers which were given at FUR-III, the third international confe­ rence on the Foundations and applications of Utility, Risk and decision theories, held in Aix-en-Provence in June 1986. An introductory chapter will provide an overview of the main questions raised on the subject since the 17th Century and more particularly so in the last thirty years, as well as some elementary information on the experimental and theoretical results obtained. It is thus hoped that any reader with some basic background in either Economics, Hanagement or Operations Research will be able to read profitably the thirty-nine other chapters. Psychologists, Sociologists, Social Philosophers and other specialists of the social sciences will also read this book with interest, as will high-level practitioners of decision~making and advanced students in one of the abovementioned fields. An expository survey of this volume will be found at the end of the introductory chapter, so that any of the seven parts of the book can be put by the reader in due perspective.

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Content:
Front Matter....Pages i-x
A Guide to Decision-Making Under Uncertainty....Pages 1-34
Front Matter....Pages 35-35
Different Experimental Procedures for Obtaining Valuations of Risky Actions: Implications for Utility Theory....Pages 37-57
Investigating Utility and Value Functions with an “Assessment Cube”....Pages 59-75
Evaluation Questions and Income Utility....Pages 77-96
Cardinal Utility: An Empirical Test....Pages 97-102
A Note on the Relationships between Utility and Value Functions....Pages 103-114
Expected Utility Theory without Continuous Preferences....Pages 115-126
Assessing other People’s Utilities....Pages 127-138
A Comment on J. Harsanyi’s “Assessing other People’s Utilities”....Pages 139-144
Front Matter....Pages 145-145
Experimental Investigations into Economic Behaviour under Uncertainty....Pages 147-162
“Preference Reversals” and the Theory of Decision Making under Risk....Pages 163-172
Preponderence of the Certainty Effect Over Probability Distortion in Decision Making Under Risk....Pages 173-187
A Model of the Influence of Certainty and Probability “Effects” on the Measurement of Utility....Pages 189-205
Front Matter....Pages 207-207
Expected Utility Theory and Ordinalism. A Political Marriage....Pages 209-220
The Bayesian Approach: Irreconcilable with Expected Utility Theory?....Pages 221-230
The General Theory of Random Choices in Relation to the Invariant Cardinal Utility Function and the Specific Probability Function. The (U, ?) Model A General Overview....Pages 231-289
A Large Scale Empirical Test for the Linearized Moments Model (LMM): Compatibility between Theory and Observation....Pages 291-311
An Axiomatic Model of Choice under Risk which is Compatible with the Certainty Effect....Pages 313-325
Decision Making Under Ambiguity: A Note....Pages 327-336
Front Matter....Pages 337-337
Cardinal Properties of “Local Utility Functions”....Pages 339-344
Front Matter....Pages 337-337
A New Neo-Bernoullian Theory: The Machina Theory A Critical Analysis....Pages 345-403
Economics as Psychology: A Cognitive Assay of the French and American Schools of Risk Theory....Pages 405-416
Front Matter....Pages 417-417
A Generalisation of Rational Behaviour....Pages 419-434
Infinite Regressions in the Optimizing Theory of Decision....Pages 435-457
Rational Behaviour and Adaptation....Pages 459-481
Metatickles, Ratificationism, and Newcomb-Like Problems without Dominance....Pages 483-501
Consequentialism and the Independence Axiom....Pages 503-516
Dynamic Choice and Rationality....Pages 517-536
World Bayesianism: Comments on the Hammond/McClennen Debate....Pages 537-542
Front Matter....Pages 543-543
Probability in Quantum Mechanics and in Utility Theory....Pages 545-556
Some Remarkable Properties of the Determination of a Bounded Continuous Distribution by its Moments....Pages 557-561
On ?-Additive Priors, ?-coherence, and the Existence of Posteriors....Pages 563-574
A New Dichotomization for Uncertainty Models....Pages 575-593
Risk and Flexibility in Microeconomic Production Theory: Principles, and Application to Energy-Saving Investments....Pages 595-600
Possibility Theory: Searching for Normative Foundations....Pages 601-614
Uncertainty Aversion and Risk Aversion in Models with Nonadditive Probabilities....Pages 615-627
A Generalized Measure of Risk Aversion, Without the Independence Axiom....Pages 629-637
Front Matter....Pages 639-639
The Income-Replacement Ratio: An Insurance Theory Approach....Pages 641-656
Industrial Practice of Decision Theory....Pages 657-677
The Expected Utility Applied to Reinsurance....Pages 679-689
Back Matter....Pages 691-707

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Content:
Front Matter....Pages i-x
A Guide to Decision-Making Under Uncertainty....Pages 1-34
Front Matter....Pages 35-35
Different Experimental Procedures for Obtaining Valuations of Risky Actions: Implications for Utility Theory....Pages 37-57
Investigating Utility and Value Functions with an “Assessment Cube”....Pages 59-75
Evaluation Questions and Income Utility....Pages 77-96
Cardinal Utility: An Empirical Test....Pages 97-102
A Note on the Relationships between Utility and Value Functions....Pages 103-114
Expected Utility Theory without Continuous Preferences....Pages 115-126
Assessing other People’s Utilities....Pages 127-138
A Comment on J. Harsanyi’s “Assessing other People’s Utilities”....Pages 139-144
Front Matter....Pages 145-145
Experimental Investigations into Economic Behaviour under Uncertainty....Pages 147-162
“Preference Reversals” and the Theory of Decision Making under Risk....Pages 163-172
Preponderence of the Certainty Effect Over Probability Distortion in Decision Making Under Risk....Pages 173-187
A Model of the Influence of Certainty and Probability “Effects” on the Measurement of Utility....Pages 189-205
Front Matter....Pages 207-207
Expected Utility Theory and Ordinalism. A Political Marriage....Pages 209-220
The Bayesian Approach: Irreconcilable with Expected Utility Theory?....Pages 221-230
The General Theory of Random Choices in Relation to the Invariant Cardinal Utility Function and the Specific Probability Function. The (U, ?) Model A General Overview....Pages 231-289
A Large Scale Empirical Test for the Linearized Moments Model (LMM): Compatibility between Theory and Observation....Pages 291-311
An Axiomatic Model of Choice under Risk which is Compatible with the Certainty Effect....Pages 313-325
Decision Making Under Ambiguity: A Note....Pages 327-336
Front Matter....Pages 337-337
Cardinal Properties of “Local Utility Functions”....Pages 339-344
Front Matter....Pages 337-337
A New Neo-Bernoullian Theory: The Machina Theory A Critical Analysis....Pages 345-403
Economics as Psychology: A Cognitive Assay of the French and American Schools of Risk Theory....Pages 405-416
Front Matter....Pages 417-417
A Generalisation of Rational Behaviour....Pages 419-434
Infinite Regressions in the Optimizing Theory of Decision....Pages 435-457
Rational Behaviour and Adaptation....Pages 459-481
Metatickles, Ratificationism, and Newcomb-Like Problems without Dominance....Pages 483-501
Consequentialism and the Independence Axiom....Pages 503-516
Dynamic Choice and Rationality....Pages 517-536
World Bayesianism: Comments on the Hammond/McClennen Debate....Pages 537-542
Front Matter....Pages 543-543
Probability in Quantum Mechanics and in Utility Theory....Pages 545-556
Some Remarkable Properties of the Determination of a Bounded Continuous Distribution by its Moments....Pages 557-561
On ?-Additive Priors, ?-coherence, and the Existence of Posteriors....Pages 563-574
A New Dichotomization for Uncertainty Models....Pages 575-593
Risk and Flexibility in Microeconomic Production Theory: Principles, and Application to Energy-Saving Investments....Pages 595-600
Possibility Theory: Searching for Normative Foundations....Pages 601-614
Uncertainty Aversion and Risk Aversion in Models with Nonadditive Probabilities....Pages 615-627
A Generalized Measure of Risk Aversion, Without the Independence Axiom....Pages 629-637
Front Matter....Pages 639-639
The Income-Replacement Ratio: An Insurance Theory Approach....Pages 641-656
Industrial Practice of Decision Theory....Pages 657-677
The Expected Utility Applied to Reinsurance....Pages 679-689
Back Matter....Pages 691-707
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