Decision theory is a theory of rationality, but the concept of rationality has several different dimensions. Making decision theory more realistic with respect to one dimension may well have the result of making it less realistic in another dimension. This paper illustrates this tension in the context of sequential choice. Trying to make decision theory more realistic by accommodating resoluteness and commitment brings the normative assessment dimension of rationality into conflict with the (...) action-guiding dimension. In the case of resolute choice the conflict comes because of a clash of perspectives. The perspective from which resolute choice seems normatively compelling is not the perspective from which it can serve the purpose of guiding action. (shrink)

This paper presents a critical reflection on dynamic consistency as commonly used in economics and decision theory, and on the difficulty to test it experimentally. It distinguishes between the uses of the term dynamic consistency in order to characterize two different properties: the first accounts for the neutrality of individual preferences towards the timing of resolution of uncertainty whereas the second guarantees that a strategy chosen at the beginning of a sequential decision problem is immune to (...) any reevaluation and will effectively be implemented from then on in the decision problem. Although these two properties are equivalent under expected utility, this is not the case under non-EU. Building on the possible characteristics of individual dynamic preferences under risk, this paper proposes a conceptual categorization, that is experimentally testable, of possible sequential decision making behaviors of non-EU maximizers. (shrink)

There are at least two plausible generalisations of subjective expected utility (SEU) theory: cumulative prospect theory (which relaxes the independence axiom) and Levi’s decision theory (which relaxes at least ordering). These theories call for a re-assessment of the minimal requirements of rational choice. Here, I consider how an analysis of sequential decision making contributes to this assessment. I criticise Hammond’s (Economica 44(176):337–350, 1977; Econ Philos 4:292–297, 1988a; Risk, decision and rationality, 1988b; Theory (...) Decis 25:25–78, 1988c) ‘consequentialist’ argument for the SEU preference axioms, but go on to formulate a related diachronic-Dutch-book-style’ argument that better achieves Hammond’s aims. Some deny the importance of Dutch-book sure losses, however, in which case, Seidenfeld’s (Econ Philos 4:267–290, 1988a) argument that distinguishes between theories that relax independence and those that relax ordering is relevant. I unravel Seidenfeld’s argument in light of the various criticisms of it and show that the crux of the argument is somewhat different and much more persuasive than what others have taken it to be; the critical issue is the modelling of future choices between ‘indifferent’ decision-tree branches in the sequential setting. Finally, I consider how Seidenfeld’s conclusions might nonetheless be resisted. (shrink)

In ‘An argument against causal decision theory’, Jack Spencer shows that standard formulations of causal decision theory run afoul of his Guaranteed Principle. In the sequential choice problem he employs to make this case, the transgression stems from an awkward discrepancy between how causalists typically value present vs future acts. This note suggests a version of causal decision theory that avoids this incongruity and so respects the Guaranteed Principle in Spencer’s problem. However, this (...) formulation, and hence symmetric appraisal of present and future acts, is also shown to be insufficient to secure causalist satisfaction of the Guaranteed Principle in general. (shrink)

Causal Decision Theory reckons the choice-worthiness of an option to be completely independent of its evidential bearing on its non-effects. But after one has made a choice this bearing is relevant to future decisions. Therefore it is possible to construct problems of sequential choice in which Causal Decision Theory makes a guaranteed loss. So Causal Decision Theory is wrong. The source of the problem is the idea that agents have a special perspective on (...) their own contemplated actions, from which evidential connections that observers can see are either irrelevant or invisible. (shrink)

The concept of transformative decision rules provides auseful tool for analyzing what is often referred to as the`framing', or `problem specification', or `editing' phase ofdecision making. In the present study we analyze a fundamentalaspect of transformative decision rules, viz. permutability. A setof transformative decision rules is, roughly put, permutable justin case it does not matter in which order the rules are applied.It is argued that in order to be normatively reasonable, sets oftransformative decision rules have to (...) satisfy a number ofstructural conditions that together imply permutability. Thisformal result gives support to a non-sequential theory of framing,i.e., a theory which prescribes no uniform order in which differentsteps in the framing process have to be performed. (shrink)

In a dynamic (sequential) framework, departures from the independence axiom (IND) are reputed to induce violations of dynamic consistency (DC), which may in turn have undesirable normative consequences. This result thus questions the normative acceptability of non expected-utility (non-EU) models, which precisely relax IND. This paper pursues a twofold objective. The main one is to discuss the normative conclusion: usual arguments linking violations of DC to departures from IND are shown to be actually based on specific (but usually remaining (...) implicit) assumptions which may rightfully be released, so that it is actually possible for a non-EU maximizer to be dynamically consistent and thus avoid normative difficulties. The second objective is to introduce a kind of `reality principle' (through two other evaluation criteria) in order to mitigate the normative requirement when examining adequate moods for non-EU decision making. (shrink)

Stability definitions for describing human behavior under conflict when coalitions may form are generalized within the Graph Model for Conflict Resolution and algebraic formulations of these definitions are provided to allow computer implementation. The more general definitions of coalitional stabilities relax the assumption of transitive graphs capturing movements under the control of decision makers, either independently or cooperatively, and allow the convenient expansion to the case of coalitions of the four basic individual stabilities consisting of Nash stability, general metarationality, (...) symmetric metarationality, and sequential stability. To permit the various coalitional stabilities to be efficiently calculated and conveniently encoded within a decision support system, algebraic expressions for the coalitional stabilities are provided in this research. Furthermore, a range of the theorems establish the mathematical credibility of employing the innovative algebraic approach to conflict resolution when coalitions are present. Finally, a conflict over the proposed exportation of bulk water from Lake Gisborne within the Canadian Province of Newfoundland and Labrador is modelled and analyzed to illustrate the practical application of the different coalitional stabilities and the strategic insights they provide. (shrink)

In this paper we suggest a model of sequential auctions with endogenous participation where each bidder conjectures about the number of participants at each round. Then, after learning his value, each bidder decides whether or not to participate in the auction. In the calculation of his expected value, each bidder uses his conjectures about the number of participants for each possible subgroup. In equilibrium, the conjectured probability is compatible with the probability of staying in the auction. In our model, (...) players face participation costs, bidders may buy as many objects as they wish and they are allowed to drop out at any round. Bidders can drop out at any time, but they cannot come back to the auction. In particular we can determine the number of participants and expected prices in equilibrium. We show that for any bidding strategy, there exists such a probability of staying in the auction. For the case of stochastically independent objects, we show that in equilibrium every bidder who decides to continue submits a bid that is equal to his value at each round. When objects are stochastically identical, we are able to show that expected prices are decreasing. (shrink)

We introduce a new allocation rule, called the sequential equal surplus division for rooted forest TU-games. We provide two axiomatic characterizations for this allocation rule. The first one uses the classical property of component efficiency plus an edge deletion property. The second characterization uses standardness, an edge deletion property applied to specific rooted trees, a consistency property, and an amalgamation property. We also provide an extension of the sequential equal surplus division applied to the problem of sharing a (...) river with bifurcations. (shrink)

When we learn how to throw darts we adjust how we throw based on where the darts stick. Much of skill learning is computationally similar in that we learn using feedback obtained after the completion of individual actions. We can formalize such tasks as a search problem; among the set of all possible actions, find the action that leads to the highest reward. In such cases our actions have two objectives: we want to best utilize what we already know (exploitation), (...) but we also want to learn to be more successful in the future (exploration). Here we tested how participants learn movement trajectories where feedback is provided as a monetary reward that depends on the chosen trajectory. We mathematically derived the optimal search policy for our experiment using decision theory. The search behavior of participants is well predicted by an ideal searcher model that optimally combines exploration and exploitation. (shrink)

Sequential decision theory formally solves the problem of rational agents in uncertain worlds if the true environmental prior probability distribution is known. Solomonoff's theory of universal induction formally solves the problem of sequence prediction for unknown prior distribution. We combine both ideas and get a parameter-free theory of universal Artificial Intelligence. We give strong arguments that the resulting AIXI model is the most intelligent unbiased agent possible. We outline how the AIXI model can formally solve (...) a number of problem classes, including sequence prediction, strategic games, function minimization, reinforcement and supervised learning. The major drawback of the AIXI model is that it is uncomputable. To overcome this problem, we construct a modified algorithm AIXItl that is still effectively more intelligent than any other time t and length l bounded agent. The computation time of AIXItl is of the order t x 2^l. The discussion includes formal definitions of intelligence order relations, the horizon problem and relations of the AIXI theory to other AI approaches. (shrink)

The necessity of consent is widely justified on the basis of the principle of respect for autonomy. Also, it is widely believed that shared decision making (SDM) is the practical device to seek patients’ consent for medical treatment. In this essay, I argue that SDM, while necessary, is insufficient for consent; because, in the paradigm of evidence-based medicine, SDM is contingent upon other practices to identify appropriate treatments that form the subjects of SDM. Indeed, case law emphasises normative (...) class='Hi'>decision-making practices that precede SDM. Furthermore, case law supplies a nuanced understanding of SDM, which includes not only exchange of information but also attention to human vulnerability that persists despite formal retention of decision-making capacity. In addition, the law marks out a space in which people with capacity are absolutely entitled to self-determination. Thus, a four-step framework of decision making can be induced from legal doctrine. This legal framework corresponds to a construct of respect for autonomy that draws upon feminist theory. Feminist scholars have objected to the focus on individuals in traditional theories of autonomy; instead, they insist that people have to be considered in the context of their social influences and relationships. Feminists separate out four ideas of autonomy, and these ideas can be used to construct a four-layered model of respect for autonomy, in which each layer corresponds sequentially to a step in the legal framework of decision making. This model of respect for autonomy provides both conceptual clarity and theoretically robust justification for doctors’ various obligations in decision-making practices for consent. (shrink)

Games and Decision Making, Second Edition, is a unique blend of decision theory and game theory. From classical optimization to modern game theory, authors Charalambos D. Aliprantis and Subir K. Chakrabarti show the importance of mathematical knowledge in understanding and analyzing issues in decision making. Through an imaginative selection of topics, Aliprantis and Chakrabarti treat decision and game theory as part of one body of knowledge. They move from problems involving the individual (...) decision-maker to progressively more complex problems such as sequential rationality, auctions, and bargaining. By building each chapter on material presented earlier, the authors offer a self-contained and comprehensive treatment of these topics. Successfully class-tested in an advanced undergraduate course at the Krannert School of Management and in a graduate course in economics at Indiana University, Games and Decision Making, Second Edition, is an essential text for advanced undergraduates and graduate students of decision theory and game theory. The book is accessible to students who have a good basic understanding of elementary calculus and probability theory. (shrink)

We show that an individual using a choice function is sequentially rational and the decisions he makes are independent of the order of implementation of the rationales if and only if he is rational with the union of the rationales as a base binary relation. When he makes his decisions following a choice correspondence, the sufficiency part of this claim still holds, the necessity part of it does not.

Decision-makers frequently struggle to base their choices on an exhaustive evaluation of all options at stake. This is particularly so when the choice problem at hand is complex, because the available alternatives are hard to compare. Rather than striving to choose the most valuable alternative, in such situations decision-makers often settle for the choice of an alternative which is not inferior to any other available alternative instead. In this paper, we extend two established models of boundedly rational choice, (...) the categorize then choose heuristic and the rational shortlist method, to incorporate this kind of “indecisive” choice behavior. We study some properties of these extensions and provide full behavioral characterizations. (shrink)

We study the performance of heuristics relative to the performance of optimal solutions in the rich domain of sequential search, where the decision to stop the search depends only on the applicant’s relative rank. Considering multiple variants of the secretary problem, that vary from one another in their formulation and method of solution, we find that descriptive heuristics perform well only when the optimal solution prescribes a single threshold value. We show that a computational heuristic originally proposed as (...) an approximate solution to a single variant of the secretary problem performs equally well in many other variants where the optimal solution prescribes multiple threshold values that gradually relax the criterion for stopping the search. Finally, we propose a new heuristic with near optimal performance in a competitive or strategic variant of the secretary problem with multiple employers competing with one another to hire job applicants. Both heuristics share a simple computational component: the ratio of the number of interviewed applicants to the number of those remaining to be searched. We present the subgame-perfect Nash equilibrium for this competitive variant and an algorithm for its computation. (shrink)

This paper analyzes a model of sequential parimutuel betting described as a two-horse race with a finite number of noise bettors and a finite number of strategic and symmetrically informed bettors. For generic objective probabilities that the favorite wins the race, a unique subgame perfect equilibrium is characterized. Additionally, two explanations for the favorite–longshot bias—according to which favorites win more often than the market's estimate of their winning chances imply—are offered. It is shown that this robust anomalous empirical regularity (...) might be due to the presence of transaction costs and/or to strategic bettors' subjective attitude to probabilities. (shrink)

The research reported here was the first empirical examination of strategic voting under the Sequential Voting by Veto (SVV) voting procedure, proposed by Mueller (1978). According to this procedure, a sequence of n voters must select s out of s+m alternatives (m=n=2; s>0). Hence, the number of alternatives exceeds the number of participants by one (n+1). When the ith voter casts her vote, she vetoes the alternative against which a veto has not yet been cast, and the s remaining (...) non-vetoed alternatives are elected. The SVV procedure invokes the minority principle, and it has advantages over all majoritarian procedures; this makes SVV a very desirable means for relatively small groups to make collective decisions. Felsenthal and Machover (1992) pointed out three models of voting under SVV: sincere, optimal, and canonical. The current research investigated, through laboratory experiments, which cognitive model better accounts for the voters' observed behavior and the likelihood of obtaining the optimal outcome as a function of the size of n (when s=1). The findings suggest that while voters under SVV use all three models, their choice is conditioned by group size. In the small groups (n=3), the canonical mode was a better predictor than the sincere model. In the larger groups (n=5), the sincere model was a better predictor than the canonical model. There is also evidence of players' learning during the experiment. (shrink)

While game theory has been transformative for decision making, the assumptions made can be overly restrictive in certain instances. In this work, we investigate some of the underlying assumptions of rationality, such as mutual consistency and best response, and consider ways to relax these assumptions using concepts from level-k reasoning and quantal response equilibrium (QRE) respectively. Specifically, we propose an information-theoretic two-parameter model called the quantal hierarchy model, which can relax both mutual consistency and best response while still (...) approximating level-k, QRE, or typical Nash equilibrium behavior in the limiting cases. The model is based on a recursive form of the variational free energy principle, representing higher-order reasoning as (pseudo) sequential decision-making in extensive-form game tree. This representation enables us to treat simultaneous games in a similar manner to sequential games, where reasoning resources deplete throughout the game-tree. Bounds in player processing abilities are captured as information costs, where future branches of reasoning are discounted, implying a hierarchy of players where lower-level players have fewer processing resources. We demonstrate the effectiveness of the quantal hierarchy model in several canonical economic games, both simultaneous and sequential, using out-of-sample modelling. (shrink)

Arif Ahmed has recently argued that causal decision theory is dynamically inconsistent and that we should therefore prefer evidential decision theory. However, the principal formulation of the evidential theory, Richard Jeffrey’s Logic of Decision, has a mixed record of its own when it comes to evaluating plans consistently across time. This note probes that neglected record, establishing the dynamic consistency of evidential decision theory within a restricted class of problems but then illustrating (...) how evidentialists can fall into sequential incoherence outside of this class. Uncovering the evidentialist’s own dynamic inconsistencies reveals, contra Ahmed, that sequential choice considerations do not significantly favor the evidentialist’s theory over the causalist’s. (shrink)

The "traditional" view of normative decision theory, as reported (for example) in chapter 2 of Luce and RaiÃa's [1957] classic work, Games and Decisions, proposes a reduction of sequential decisions problems to non-sequential decisions: a reduction of extensive forms to normal forms. Nonetheless, this reduction is not without its critics, both from inside and outside expected utility theory, It islay purpose in this essay to join with those critics by advocating the following thesis.

When making decisions, people naturally face uncertainty about the potential consequences of their actions due in part to limits in their capacity to represent, evaluate or deliberate. Nonetheless, they aim to make the best decisions possible. In Decision Theory with a Human Face, Richard Bradley develops new theories of agency and rational decision-making, offering guidance on how 'real' agents who are aware of their bounds should represent the uncertainty they face, how they should revise their opinions as (...) a result of experience and how they should make decisions when lacking full awareness of, or precise opinions on relevant contingencies. He engages with the strengths and flaws of Bayesian reasoning, and presents clear and comprehensive explorations of key issues in decision theory, from belief and desire to semantics and learning. His book draws on philosophy, economics, decision science and psychology, and will appeal to readers in all of these disciplines. (shrink)

As stochastic independence is essential to the mathematical development of probability theory, it seems that any foundational work on probability should be able to account for this property. Bayesian decision theory appears to be wanting in this respect. Savage’s postulates on preferences under uncertainty entail a subjective expected utility representation, and this asserts only the existence and uniqueness of a subjective probability measure, regardless of its properties. What is missing is a preference condition corresponding to stochastic independence. (...) To fill this significant gap, the article axiomatizes Bayesian decision theory afresh and proves several representation theorems in this novel framework. (shrink)

Rational choice theory enjoys unprecedented popularity and influence in the behavioral and social sciences, but it generates intractable problems when applied to socially interactive decisions. In individual decisions, instrumental rationality is defined in terms of expected utility maximization. This becomes problematic in interactive decisions, when individuals have only partial control over the outcomes, because expected utility maximization is undefined in the absence of assumptions about how the other participants will behave. Game theory therefore incorporates not only rationality but (...) also common knowledge assumptions, enabling players to anticipate their co-players' strategies. Under these assumptions, disparate anomalies emerge. Instrumental rationality, conventionally interpreted, fails to explain intuitively obvious features of human interaction, yields predictions starkly at variance with experimental findings, and breaks down completely in certain cases. In particular, focal point selection in pure coordination games is inexplicable, though it is easily achieved in practice; the intuitively compelling payoff-dominance principle lacks rational justification; rationality in social dilemmas is self-defeating; a key solution concept for cooperative coalition games is frequently inapplicable; and rational choice in certain sequential games generates contradictions. In experiments, human players behave more cooperatively and receive higher payoffs than strict rationality would permit. Orthodox conceptions of rationality are evidently internally deficient and inadequate for explaining human interaction. Psychological game theory, based on nonstandard assumptions, is required to solve these problems, and some suggestions along these lines have already been put forward. Key Words: backward induction; Centipede game; common knowledge; cooperation; epistemic reasoning; game theory; payoff dominance; pure coordination game; rational choice theory; social dilemma. (shrink)

This essay makes the case for, in the phrase of Angelika Kratzer, packing the fruits of the study of rational decision-making into our semantics for deontic modals—specifically, for parametrizing the truth-condition of a deontic modal to things like decision problems and decision theories. Then it knocks it down. While the fundamental relation of the semantic theory must relate deontic modals to things like decision problems and theories, this semantic relation cannot be intelligibly understood as representing (...) the conditions under which a deontic modal is true. Rather it represents the conditions under which it is accepted by a semantically competent agent. This in turn motivates a reorientation of the whole of semantic theorizing, away from the truth-conditional paradigm, toward a form of Expressivism. (shrink)

Normative ethical theories owe us an account of how to evaluate decisions under risk and uncertainty. Deontologists seem at a disadvantage here: our best decision theories seem tailor-made for consequentialism. For example, decision theory enjoins us to always perform our best option; deontology is more permissive. In this paper, we discuss and defend the idea that, when some pro-tanto wrongful act is all-things considered permissible, because it is a ‘lesser evil’, it is often merely permissible, by the (...) lights of deontology. We show that this raises new problems for deontological decision theory, and we show that to resolve them, we need to take a more innovative approach to morally evaluating decision-making under risk and uncertainty. (shrink)

This paper develops an argument against causal decision theory. I formulate a principle of preference, which I call the Guaranteed Principle. I argue that the preferences of rational agents satisfy the Guaranteed Principle, that the preferences of agents who embody causal decision theory do not, and hence that causal decision theory is false.

Decision theory has at its core a set of mathematical theorems that connect rational preferences to functions with certain structural properties. The components of these theorems, as well as their bearing on questions surrounding rationality, can be interpreted in a variety of ways. Philosophy’s current interest in decision theory represents a convergence of two very different lines of thought, one concerned with the question of how one ought to act, and the other concerned with the question (...) of what action consists in and what it reveals about the actor’s mental states. As a result, the theory has come to have two different uses in philosophy, which we might call the normative use and the interpretive use. It also has a related use that is largely within the domain of psychology, the descriptive use. This essay examines the historical development of decision theory and its uses; the relationship between the norm of decision theory and the notion of rationality; and the interdependence of the uses of decision theory. (shrink)

Decision Theory and Rationality offers a challenging new interpretation of a key theoretical tool in the human and social sciences. This accessible book argues, contrary to orthodoxy in politics, economics, and management science, that decision theory cannot provide a theory of rationality.

Naive versions of decision theory take probabilities and utilities as primitive and use expected value to give norms on rational decision. However, standard decision theory takes rational preference as primitive and uses it to construct probability and utility. This paper shows how to justify a version of the naive theory, by taking dominance as the most basic normatively required preference relation, and then extending it by various conditions under which agents should be indifferent between (...) acts. The resulting theory can make all the decisions of classical expected utility theory, plus more in cases where expected utilities are infinite or undefined. Although the theory requires similarly strong assumptions to classical expected utility theory, versions of the theory can be developed with slightly weaker assumptions, without having to prove a new representation theorem for the weaker theory. This alternate foundation is particularly useful if probability is prior to preference, as suggested by the recent program to base probabilism on accuracy and alethic considerations rather than pragmatic ones. (shrink)

In this study, we are concerned with how agents can best amalgamate their private information about a binary state of Nature. The agents are heterogeneous in their “ability”, the quality of their private information. The agents cannot directly communicate their private information but instead can only vote between the two states. We first describe possible methods of sequential majority voting, and then we analyze a particular one: the first n-1\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$n-1$$\end{document} jurors (...) vote simultaneously and, in the case of a tie, the remaining juror has the casting vote. We prove that when n=3\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$n=3$$\end{document}, the probability of a correct verdict is maximized when the agent of median ability has the casting vote. (shrink)

Decision theory has had a long-standing history in the behavioural and social sciences as a tool for constructing good approximations of human behaviour. Yet as artificially intelligent systems (AIs) grow in intellectual capacity and eventually outpace humans, decision theory becomes evermore important as a model of AI behaviour. What sort of decision procedure might an AI employ? In this work, I propose that policy-based causal decision theory (PCDT), which places a primacy on the (...) decision-relevance of predictors and simulations of agent behaviour, may be such a procedure. I compare this account to the recently-developed functional decision theory (FDT), which is motivated by similar concerns. I also address potentially counterintuitive features of PCDT, such as its refusal to condition on observations made at certain times. (shrink)

Evidential Decision Theory is flawed, but its flaws are not fully understood. David Lewis (1981) famously charged that EDT recommends an irrational policy of managing the news and “commends the ostrich as rational”. Lewis was right, but the case he appealed to—Newcomb’s Problem—does not demonstrate his conclusion. Indeed, decision theories other than EDT, such as Committal Decision Theory and Functional Decision Theory, agree with EDT's verdicts in Newcomb’s Problem, but their flaws, whatever they (...) may be, do not stem from any ostrich-like recommendations. We offer a new case which shows that EDT mismanages the news, thus vindicating Lewis’s original charge. We argue that this case reveals a flaw in the “Why ain’cha rich?” defense of EDT. We argue further that this case is an advance on extant putative counterexamples to EDT. (shrink)

In ”Decision Theory and Epistemology,” Mark Kaplan finds it characteristic of orthodox Bayesians to hold that for each person and each hypothesis she comprehends, there is a precise degree of confidence that person has in the truth of that proposition, and no person can be counted as rational unless the degree of confidence assignment she thus harbors satisfies the axioms of the probability calculus. Kaplan's purpose is twofold. First, he aims to show that, as powerful as many criticisms (...) are against orthodox Bayesianism, there is a credible kind of Bayesianism. Without appeal to idealization or false precision, it offers a substantive account of how the probability calculus constrains the opinions of actual persons and of how this account impinges on traditional epistemological concerns. Second, he aims to show how this Bayesianism finds a foundation in considerations concerning rational preference. (shrink)

Consider an agent who faces choice problems and learns information about an objective state of the world through a technology of sequential experiments. We consider two cases of learning costs. In the first, the agent discounts future payoffs geometrically. In the second, she incurs a constant flow cost of time. If the observable data consist only of the joint distributions over chosen actions and decision times, an analyst can uniquely identify the discount factor in the first case and (...) the flow cost of time in the second case. Moreover, we show how an analyst can recover the agent’s ex ante welfare in both cases, besides identifying her prior belief. Our approach does not rely on any knowledge about the underlying sequential experiment. (shrink)

The problem of the man who met death in Damascus appeared in the infancy of the theory of rational choice known as causal decision theory. A straightforward, unadorned version of causal decision theory is presented here and applied, along with Brian Skyrms’ deliberation dynamics, to Death in Damascus and similar problems. Decision instability is a fascinating topic, but not a source of difficulty for causal decision theory. Andy Egan’s purported counterexample to causal (...) decision theory, Murder Lesion, is considered; a simple response shows how Murder Lesion and similar examples fail to be counterexamples, and clarifies the use of the unadorned theory in problems of decision instability. I compare unadorned causal decision theory to previous treatments by Frank Arntzenius and by Jim Joyce, and recommend a well-founded heuristic that all three accounts can endorse. Whatever course deliberation takes, causal decision theory is consistently a good guide to rational action. (shrink)

Orthodox decision theory gives no advice to agents who hold two goods to be incommensurate in value because such agents will have incomplete preferences. According to standard treatments, rationality requires complete preferences, so such agents are irrational. Experience shows, however, that incomplete preferences are ubiquitous in ordinary life. In this paper, we aim to do two things: (1) show that there is a good case for revising decision theory so as to allow it to apply non-vacuously (...) to agents with incomplete preferences, and (2) to identify one substantive criterion that any such non-standard decision theory must obey. Our criterion, Competitiveness, is a weaker version of a dominance principle. Despite its modesty, Competitiveness is incompatible with prospectism, a recently developed decision theory for agents with incomplete preferences. We spend the final part of the paper showing why Competitiveness should be retained, and prospectism rejected. (shrink)

We study how to partition a set of agents in a stable way when each coalition in the partition has to share a unit of a perfectly divisible good, and each agent has symmetric single-peaked preferences on the unit interval of his potential shares. A rule on the set of preference profiles consists of a partition function and a solution. Given a preference profile, a partition is selected and as many units of the good as the number of coalitions in (...) the partition are allocated, where each unit is shared among all agents belonging to the same coalition according to the solution. A rule is stable at a preference profile if no agent strictly prefers to leave his coalition to join another coalition and all members of the receiving coalition want to admit him. We show that the proportional solution and all sequential dictator solutions admit stable partition functions. We also show that stability is a strong requirement that becomes easily incompatible with other desirable properties like efficiency, strategy-proofness, anonymity, and non-envyness. (shrink)

In this paper we discuss how Causal Decision Theory should be modified to handle a class of problematic cases involving deterministic laws. Causal Decision Theory, as it stands, is problematically biased against your endorsing deterministic propositions (for example it tells you to deny Newtonian physics, regardless of how confident you are of its truth). Our response is that this is not a problem for Causal Decision Theory per se, but arises because of the standard (...) method for assessing the truth of certain counterfactuals. The truth of deterministic laws is `modally fragile' on the standard semantics for counterfactuals: if determinism is true and you were to do otherwise, the laws would be different. We provide two ways of avoiding this problem: 1) supplement the standard semantics for counterfactuals with impossible worlds, or 2) introduce rigid designators into the description of problematic decision situations. We argue that both of these approaches are well-motivated and can be readily incorporated into Lewisian Causal Decision Theory. (shrink)

Within the last decade, there has been a dramatic bloom in ridesharing businesses along with the emergence of new enabling technologies. A central issue in ridesharing, which is also important in the general domain of cost-sharing in economics and computer science, is that the sharing of cost implies positive externalities and hence coordination problems for the network users. We investigate these problems experimentally in the present study. In particular, we focus on how sequential observability of transportation mode choices can (...) be a powerful facilitator of coordination in ridesharing. Our study abstracts the essential issues of coordination in ridesharing into a directed network game with experimentally testable predictions. In line with the theoretical analysis, our experimental evidence shows that even a limited extent of sequential choice observability might lead to efficient coordination. However, convergence to efficiency is slower with more limited observability, resulting in a significant increase in travel cost. (shrink)

This paper reports an experimental comparison of attitudes toward time and toward money in experience-based decisions. Preferences were elicited under rank-dependent utility for prospects with two or three consequences expressed either in time or in monetary units. Probabilities were unknown but learned through sampling. More specifically, time and money were compared under two conditions. In a first experiment, both consequences and probabilities of prospects were unknown and learned through sequential sampling. In a second experiment, the possible consequences were revealed (...) after the sampling. A real incentive system was implemented for both time and money. The heterogeneity of preferences was assessed for time and for money through individual and mixed modeling estimations. We observe that the nature of consequences (time or money) modifies probability weighting in terms of elevation and sensitivity. Subjects exhibit more optimism and less sensitivity to probability changes when deciding about time than about money. Revealing the consequences impacts the shape of the utility function and leaves probability weighting unchanged. We also observe that the real incentives have no effect except for the reduction in decision errors. This effect is stronger for money than for time. (shrink)