Are the recent findings of Behavioural Game Theory (BGT) on unselfish behaviours relevant for the progress of game theory? Is the methodology of BGT, centred around the attempt to study theoretically players’ utility functions in the light of the feedback that experimental evidence can produce on the theory, a satisfactory one? Or is the creation of various types of ‘social preferences’ just wasteful tinkering? This article compares BGT with the methodology of Rational Game Theory (RGT). BGT is viewed as a (...) more promising and constructive approach, with regard to the relationship between experimental data and theoretical modelling. However, I also argue that today RGT and BGT are closer to one another than often thought. (shrink)

Hamblin distinguished between formal and descriptive dialectic. Formal normative models of deliberation dialogue have been strongly emphasized as argumentation frameworks in computer science. But making such models of deliberation applicable to real natural language examples has reached a point where the descriptive aspect needs more interdisciplinary work. The new formal and computational models of deliberation dialogue that are being built in computer science seem to be closely related to some already existing and very well established computing technologies such as problem (...) solving and decision making, but whether or how dialectical argumentation can be helpful to support these systems remains an open question. The aim of this paper is to examine some real examples of argumentation that seem to hover on the borderlines between deliberation, problem solving and decision making. (shrink)

This article assesses two major conceptual arguments against theories of choice.The first argument concerns the circularity of belief-desire psychology, on which decision theory is based. The second argument concerns the normativity arising from the concept of rationality. Each argument is evaluated against experimental practice in economics and psychology, and it is concluded that both arguments fail to establish their skeptical conclusion that there can be no science of intentional human actions.

Consistency of choice is a fundamental and recurring theme in decision theory, social choice theory, behavioral economics, and psychological sciences. The purpose of this paper is to study the consistency of choice independent of the particular decision model at hand. Consistency is viewed as an inherently logical concept that is fundamentally void of connotation and is thus disentangled from traditional rationality or consistency conditions imposed on decision models. The proposed formalization of consistency takes two forms: internal consistency, which refers to (...) the property that a choice model does not generate contradictory statements; and semantic consistency, which refers to the idea that a theory’s predictions are valid with respect to some observed data. In addressing semantic consistency, the relationship between theory and data is analyzed in terms of so-called duality mappings, which allow a passage between the two universes in a way that consistency is preserved. The formalization of consistency concepts relies on adapting the revealed preference theory to the context-dependent setting. The paper concludes by discussing the implications of the proposed framework and how it relates to classical revealed preference theory and other formalizations of the relationship between the theory and reality of choice. (shrink)

When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all (...) of one's beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible. (shrink)

Since the early days of economics, the rationality principle has been a core element of economic theorizing. It is part of almost any theoretical framework that economists use to generate knowledge. Despite its central role, the principle’s epistemic status and function continue to be debated between empiricists and rationalists, and a clear winner is yet to emerge. One point of contention is that we cannot explain the principle’s special status in light of clear evidence against its empirical validity and the (...) continuous conceptual changes it undergoes. In this paper, I argue that we should think of the rationality principle as a functional a priori principle along the lines of a pragmatic theory of constitutive elements recently put forward by David Stump. Such an approach would explain the principle’s persistence and changing status. More generally, the pragmatic theory of constitutive elements in science offers a viable alternative to rationalism and empiricism that allows for approaching the debate about the status and function of the rationality principle in economics. It provides a new framework and starting point to think about the usefulness of a central first principle in economics in a constructive way. (shrink)

The answer in a nutshell is: Yes, five years ago, but nobody has noticed. Nobody noticed because the majority of social scientists subscribe to one of the following views: (1) the ‘anomalous’ behaviour observed in standard prisoner’s dilemma or ultimatum game experiments has refuted standard game theory a long time ago; (2) game theory is flexible enough to accommodate any observed choices by ‘refining’ players’ preferences; or (3) it is just a piece of pure mathematics (a tautology). None of these (...) views is correct. This paper defends the view that GT as commonly understood is not a tautology, that it suffers from important (albeit very recently discovered) empirical anomalies, and that it is not flexible enough to accommodate all the anomalies in its theoretical framework. It also discusses the experiments that finally refuted game theory, and concludes trying to explain why it took so long for experimental game theorists to design experiments that could adequately test the theory. (shrink)

In this essay I dispute the widely held view that utility theory and decision theory are formalizations of instrumental rationality. I show that the decision theoretic framework has no deep problems accommodating the ?reasonable? qua a preference to engage in fair cooperation as such. All evaluative criteria relevant to choice can be built into a von Neumann?Morgenstern utility function. I focus on the claim that, while rational choice?driven agents are caught in the Pareto?inferior outcome, reasonable agents could ?solve? the PD (...) and cooperate. Not so, I argue. If reasonable people find themselves in PD situations they too would follow the dominant ?defect? strategy. The difference between instrumentally rational agents and those who are also reasonable is not that they would behave differently in Prisoner?s Dilemmas, but that reasonable people are more successful at avoiding the Prisoner?s Dilemma and tend to play more cooperative games. (shrink)

This research examined whether youth's forecasted risk taking is best predicted by a compensatory (namely, subjective expected utility) or non-compensatory (e.g., single-factor) model. Ninety youth assessed the importance of perceived benefits, importance of perceived drawbacks, subjective probability of benefits, and subjective probability of drawbacks for 16 risky behaviors clustered evenly into recreational and health/safety domains. In both domains, there was strong support for a noncompensatory model in which only the perceived importance of the benefits of engaging in a risky behavior (...) predicted youths' forecasted engagement in risky behavior. The study overcomes earlier methodological weaknesses by fully decomposing participants' assessments into importance and probability aspects for both benefits and drawbacks. As such, the findings provide clear evidence in support of a boundedrationality perspective on youth decision making regarding risk taking. (shrink)

Norms—that is, specifications of what we ought to do—play a critical role in the study of informal argumentation, as they do in studies of judgment, decision-making and reasoning more generally. Specifically, they guide a recurring theme: are people rational? Though rules and standards have been central to the study of reasoning, and behavior more generally, there has been little discussion within psychology about why (or indeed if) they should be considered normative despite the considerable philosophical literature that bears on this (...) topic. In the current paper, we ask what makes something a norm, with consideration both of norms in general and a specific example: norms for informal argumentation. We conclude that it is both possible and desirable to invoke norms for rational argument, and that a Bayesian approach provides solid normative principles with which to do so. (shrink)

According to a widely held view, rationality demands that the preferences of a person be transitive. The transitivity assumption is an axiom in standard theories of rational choice. It is also prima facie very plausible. I argue here that transitivity is not a necessary condition of rationality; it is a constraint only in some cases. The argument presented here is based on the non-linearity of differential utility functions. This paper has four parts. First, I present an argument against the transitivity (...) assumption (I, II). Second, I discuss some objections; this will also bring out some features of the view defended here, like the essentially comparative nature of choice (III). Then, I discuss certain proposals that promise to avoid my conclusion (IV). Finally, I go into some implications concerning the nature of rational decision making (V). To accept some intransitivities as rational does not make our life easier; it can even lead to hard choices. However, it does not lead to skepticism about rational choice. (shrink)

Probably many people have cyclic preferences: they prefer A to B, B to C and C to A for some objects of choice A, B and C. Recent work has resurrected the objection to cyclic preference that agents possessing them are open to exploitation by means of ‘money pumps’. The paper briefly reviews this work and proposes a general approach to problems of sequential choice that makes cyclic preference immune to exploitation by means of these new mechanisms.

Laboratory experimentation was once considered impossible or irrelevant in economics. Recently, however, economic science has gone through a real ‘laboratory revolution’, and experimental economics is now a most lively subfield of the discipline. The methodological advantages and disadvantages of controlled experimentation constitute the main subject of this thesis. After a survey of the literature on experiments in philosophy and economics, the problem of testing normative theories of rationality is tackled. This philosophical issue was at the centre of a famous controversy (...) in decision theory, during which a methodology of normative falsification was first articulated and used to assess experimental results. In the third chapter, the methodological advantages of controlled experimentation are illustrated and discussed with examples taken from the experiments on the so-called ‘preference reversal’ phenomenon. Laboratory testing allows to establish with a high degree of certainty that certain phenomena lie behind the experimental data, by means of independent testing, elimination of alternative hypotheses, and the use of different instruments of observation. The fourth chapter is devoted to a conceptual analysis of the problem of ‘parallelism’. This is the problem of inferring from the occurrence of a phenomenon in the laboratory, to its instantiation also in non-laboratory environments. Experimental economists have discussed parallelism at length, and their views are presented and criticised. Eventually, it is argued that parallelism is a factual matter and as such can only be established on empirical grounds. The fifth chapter provides an example of how one can argue for parallelism, focusing on the case of experimentation on the ‘winner’s curse’ phenomenon. The role of experiments as ‘mediators’ between theoretical models and their target domain of application is illustrated, and the structure of parallelism arguments analysed in detail. Finally, in the last chapter, economic experiments are compared to simulations, in order to highlight their specific characteristics. (shrink)

Taking Savage's subjective expected utility theory as a starting point, this thesis distinguishes three types of uncertainty which are incompatible with Savage's theory for small worlds: ambiguity, option uncertainty and state space uncertainty. Under ambiguity agents cannot form a unique and additive probability function over the state space. Option uncertainty exists when agents cannot assign unique consequences to every state. Finally, state space uncertainty arises when the state space the agent constructs is not exhaustive, such that unforeseen contingencies can occur. (...) Chapter 2 explains Savage's notions of small and large worlds, and shows that ambiguity, option and state space uncertainty are incompatible with the small world representation. The chapter examines whether it is possible to reduce these types of uncertainty to one another. Chapter 3 suggests a definition of objective ambiguity by extending Savage's framework to include an exogenous likelihood ranking over events. The definition allows for a precise distinction between ambiguity and ambiguity attitude. The chapter argues that under objective ambiguity, ambiguity aversion is normatively permissible. Chapter 4 gives a model of option uncertainty. Using the two weak assumptions that the status quo is not uncertain, and that agents are option uncertainty averse, we derive status quo bias, the empirical tendency for agents to choose the status quo over other available alternatives. The model can be seen as rationalising status quo bias. Chapter 5 gives an axiomatic characterisation and corresponding representation theorem for the priority heuristic, a heuristic which predicts binary decisions be- tween lotteries particularly well. The chapter analyses the normative implications of this descriptive model. Chapter 6 defends the pluralist view of decision theory this thesis assumes. The chapter discusses possible applications of the types of uncertainty defined in the thesis, and concludes. (shrink)