This article provides a theoretical and doctrinal explanation of how the but-for test links gains to the wrong that produced them. Gain-based damages cases focus on the gain resulting from the defendant’s tortious behaviour. In these cases, the contrastive aspect of the but-for test, requiring the factfinder to consider the hypothetical result that would have occurred had the right thing happened instead of the defendant’s wrongdoing, is not confined to the question of reasonability, as it is in negligence cases. Rather, (...) in gain-based damages cases, the factfinder faces the open-ended normative task of determining the hypothetically appropriate scenario that contrasts with the wrongdoing that happened in reality. For this reason, in gain-based damages cases, the normative sensitivity of the but-for test is revealed in full. The article explains how this sensitivity influences the result of the but-for test expressing the amount of gain causally attributed to the defendant’s wrongdoing. (shrink)

Gilboa and Schmeidler provide a paradigm for modelling decision making under uncertainty. Unlike the classical theory of expected utility maximization, case-based decision theory does not assume that decision makers know the possible 'states of the world' or the outcomes, let alone the decision matrix attaching outcomes to act-state pairs. Case-based decision theory suggests that people make decisions by analogies to past cases: they tend to choose acts that performed well in the past in similar situations, and to avoid acts (...) that performed poorly. It is an alternative to expected utility theory when both states of the world and probabilities are neither given in the problem nor can be easily constructed. The authors describe the general theory and its relationship to planning, repeated choice problems, inductive inference, and learning; they highlight its mathematical and philosophical foundations and compare it with expected utility theory as well as with rule-based systems. (shrink)

This book offers a rigorous, concise, and nontechnical introduction to some of the fundamental insights of rational choice theory. It draws on formal theories of microeconomics, decision making, games, and social choice, and on ideas developed in philosophy, psychology, and sociology. Itzhak Gilboa argues that economic theory has provided a set of powerful models and broad insights that have changed the way we think about everyday life. He focuses on basic insights of the rational choice paradigm--the general conceptualization rather (...) than a particular theory--that survive recent critiques of economic theory's various failures. Gilboa explains the main concepts in language accessible to the nonspecialist, offering a nonmathematical guide to some of the main ideas developed in economic theory in the second half of the twentieth century. Chapters cover feasibility and desirability, utility maximization, constrained optimization, expected utility, probability and statistics, aggregation of preferences, games and equilibria, free markets, and rationality and emotions. Online appendixes offer additional material, including a survey of relevant mathematical concepts. (shrink)

A nontechnical, concise, and rigorous introduction to the rational choice paradigm,focusing on basic insights applicable in fields ranging from economics to philosophy.

This note argues that, under some circumstances, it is more rational not to behave in accordance with a Bayesian prior than to do so. The starting point is that in the absence of information, choosing a prior is arbitrary. If the prior is to have meaningful implications, it is more rational to admit that one does not have sufficient information to generate a prior than to pretend that one does. This suggests a view of rationality that requires a compromise between (...) internal coherence and justification, similarly to compromises that appear in moral dilemmas. Finally, it is argued that Savage's axioms are more compelling when applied to a naturally given state space than to an analytically constructed one; in the latter case, it may be more rational to violate the axioms than to be Bayesian. (shrink)

Economic theory reduces the concept of rationality to internal consistency. As far as beliefs are concerned, rationality is equated with having a prior belief over a “Grand State Space”, describing all possible sources of uncertainties. We argue that this notion is too weak in some senses and too strong in others. It is too weak because it does not distinguish between rational and irrational beliefs. Relatedly, the Bayesian approach, when applied to the Grand State Space, is inherently incapable of describing (...) the formation of prior beliefs. On the other hand, this notion of rationality is too strong because there are many situations in which there is not sufficient information for an individual to generate a Bayesian prior. It follows that the Bayesian approach is neither sufficient not necessary for the rationality of beliefs. (shrink)

Depression is associated with increased maintenance of negative affect (NA) and reduced – blunted and short-lived – maintenance of positive affect (PA). Studies have focused on factors associated with the maintenance of NA, specifically, the emotion regulation strategy of brooding and the capacity to hold negative affective experiences in working memory (WM). Despite its theoretical importance, less attention has been given to factors associated with the maintenance of PA in depression. This study aims to synthesise factors playing a role in (...) the maintenance of both NA and PA. Specifically, we used self-reported assessment of PA and NA regulation and performance-based measures of NA and PA processing in WM to predict depressive symptoms severity. Participants (N = 219) completed the Affective Maintenance Task (AMT, Mikels et al., Citation2008), which provided performance-based measures of PA and NA maintenance, and filled out questionnaires assessing brooding, positive rumination and depressive severity. Brooding, positive rumination and AMT-based measures of positive (but not negative) affective information processing were independently associated with depressive symptoms. We highlight the unique contributions of PA processing, as well as of self-reported emotion regulation strategies in understanding depression maintenance. (shrink)

Do axiomatic derivations advance positive economics? If economists are interested in predicting how people behave, without a pretense to change individual decision making, how can they benefit from representation theorems, which are no more than equivalence results? We address these questions. We propose several ways in which representation results can be useful and discuss their implications for axiomatic decision theory.

The majority of evidence on social anxiety -linked attentional biases to threat comes from research using facial expressions. Emotions are, however, communicated through other channels, such as voice. Despite its importance in the interpretation of social cues, emotional prosody processing in SA has been barely explored. This study investigated whether SA is associated with enhanced processing of task-irrelevant angry prosody. Fifty-three participants with high and low SA performed a dichotic listening task in which pairs of male/female voices were presented, one (...) to each ear, with either the same or different prosody. Participants were instructed to focus on either the left or right ear and to identify the speaker’s gender in the attended side. Our main results show that, once attended, task-irrelevant angry prosody elicits greater interference than does neutral prosody. Surprisingly, high socially anxious participants were less prone to distraction from attended-angry prosody than were low socially anxious individuals. These findings emphasise the importance of examining SA-related biases across modalities. (shrink)

We suggest a model that describes how counterfactuals are constructed and justified. The model can describe how counterfactual beliefs are updated given the unfolding of actual history. It also allows us to examine the use of counterfactuals in prediction, and to show that a logically omniscient reasoner gains nothing from using counterfactuals for prediction.

In recent years the understanding of the cognitive foundations of economic behavior has become increasingly important. This volume contains contributions from such leading scholars as Adam Brandenburger, Michael Bacharach and Patrick Suppes. It will be of great interest to academics and researchers involved in the field of economics and psychology as well as those interested in political economy more generally.

Both economists and psychologists are interested in understanding decision making under uncertainty. Yet, they rely on different concepts to analyse human behaviour: economists use economic preference parameters rooted in utility theory, while psychologists use personality traits to describe responses to uncertain situations. Using a large sample of university students, this study examines and contrasts five economic preference parameters and six psychological personality traits that are commonly used to study individuals’ attitudes towards uncertainty. A novelty of this paper is including both (...) the economic concept of ambiguity aversion as well as the personality trait of ambiguity intolerance. We find that standard economic preference measures based on incentivized choice tasks seem to capture rather different characteristics than psychological personality traits. In contrast, economic preference measures obtained from self-assessment questions appear more related to personality traits, especially ambiguity intolerance. (shrink)

We assume that people have a need to make statements, and construct a model in which this need is the sole determinant of voting behavior. In this model, an individual selects a ballot that makes as close a statement as possible to her ideal point, where abstaining from voting is a possible (null) statement. We show that in such a model, a political system that adopts approval voting may be expected to enjoy a significantly higher rate of participation in elections (...) than a comparable system with plurality rule. (shrink)

It is argued that, contrary to a rather prevalent view within economic theory, rationality does not imply Bayesianism. The note begins by defining these terms and justifying the choice of these definitions, proceeds to survey the main justification for this prevalent view, and concludes by highlighting its weaknesses.

Social-rank cues communicate social status or social power within and between groups. Information about social-rank is fluently processed in both visual and auditory modalities. So far, the investigation on the processing of social-rank cues has been limited to studies in which information from a single modality was assessed or manipulated. Yet, in everyday communication, multiple information channels are used to express and understand social-rank. We sought to examine the voluntary nature of processing of facial and vocal signals of social-rank using (...) a cross-modal Stroop task. In two experiments, participants were presented with face-voice pairs that were either congruent or incongruent in social-rank. Participants’ task was to label face social dominance while ignoring the voice, or label voice social dominance while ignoring the face. In both experiments, we found that face-voice incongruent stimuli were processed more slowly and less accurately than were the congruent stimuli in the face-attend and the voice-attend tasks, exhibiting classical Stroop-like effects. These findings are consistent with the functioning of a social-rank bio-behavioural system which consistently and automatically monitors one’s social standing in relation to others and uses that information to guide behaviour. (shrink)

Coordination games often have multiple equilibria. The selection of equilibrium raises the question of belief formation: how do players generate beliefs about the behavior of other players? This article takes the view that the answer lies in history, that is, in the outcomes of similar coordination games played in the past, possibly by other players. We analyze a simple model in which a large population plays a game that exhibits strategic complementarities. We assume a dynamic process that faces different populations (...) with such games for randomly selected values of a parameter. We introduce a belief formation process that takes into account the history of similar games played in the past, not necessarily by the same population. We show that when history serves as a coordination device, the limit behavior depends on the way history unfolds, and cannot be determined from a-priori considerations. (shrink)

The interpretation of economic theories varies along several dimensions. First, models can describe reality, illustrate a recommended state of affairs, or analyze the structure and implications of a theory. Second, theories can be used for prediction or for explanation. Third, theories can relate to reality in a rule-based or case-based manner. Fourth, theories can be statements about economic reality or about the act of economic reasoning itself. Fifth, theories can offer predictions or merely critique reasoning. We argue that theories are (...) often open to multiple interpretations which can shift depending on the context in which the theory is applied, the surrounding economic literature, and the argument made by the interpreter. (shrink)

Volume 26, Issue 4, December 2019, Page 389-392.

It has been argued that Pareto-improving trade is not as compelling under uncertainty as it is under certainty. The former may involve agents with different beliefs, who might wish to execute trades that are no more than betting. In response, the concept of no-betting Pareto dominance was introduced, requiring that putative Pareto improvements must be rationalizable by some common probabilities, even though the participants’ beliefs may differ. In this paper, we argue that this definition might be too narrow for use (...) when agents are not Bayesian. Agents who face ambiguity might wish to trade in ways that can be justified by common ambiguity, though not necessarily by common probabilities. We accordingly extend the notion of no-betting Pareto dominance to characterize trades than are “no-betting Pareto” ranked according to the maxmin expected utility model. (shrink)

We suggest to define objective probabilities by similarity-weighted empirical frequencies, where more similar cases get a higher weight in the computation of frequencies. This formula is justified intuitively and axiomatically, but raises the question, which similarity function should be used? We propose to estimate the similarity function from the data, and thus obtain objective probabilities. We compare this definition to others, and attempt to delineate the scope of situations in which objective probabilities can be used.

We suggest to define objective probabilities by similarity-weighted empirical frequencies, where more similar cases get a higher weight in the computation of frequencies. This formula is justified intuitively and axiomatically, but raises the question, which similarity function should be used? We propose to estimate the similarity function from the data, and thus obtain objective probabilities. We compare this definition to others, and attempt to delineate the scope of situations in which objective probabilities can be used.

Abstract:I argue that, since the legal order is a public good, an act of legal punishment may be viewed as the imposition of a kind of tax, which I label ‘a quasi-tax’. Once punishment is viewed as a quasi-tax, the traditionally opposed approaches to punishment may be reconciled, as both utility and retribution jointly justify an act of legal punishment. I discuss objections to my argument and I reply to them.

Unimpressed by the exhortations of previous generations, our modern society accepts premarital sex. Advisably? In an attempt to answer this question, I shall make three related points, drawing on findings from evolutionary psychology and bargaining theory. First, premarital sex is potentially exploitative. Second, to allow premarital sex is not merely to extend a certain freedom, but indirectly to compel women to practice premarital sex, hence effectively to foster their exploitation. Third, some of the measures taken to combat the sexual exploitation (...) of single women can make matters worse, as the implementation of these measures tends to increase rather than decrease the level of the exploitation. (shrink)

Retroviral vectors utilize the biochemical processes unique to retroviruses, to transfer genes with high efficiency into a wide variety of cell types in tissue culture and in living animals. With such vectors, the effect of newly introduced genes and the mechanism of gene expression can be studied in cell types so far refractory to other methods of transfer.

A decision maker has to choose one of several random variables whose distributions are not known. As a Bayesian, she behaves as if she knew the distributions. In this paper we suggest an axiomatic derivation of these (subjective) distributions, which is more economical than the derivations by de Finetti or Savage. Whereas the latter derive the whole joint distribution of all the available random variables, our approach derives only the marginal distributions. Correspondingly, the preference questionnaire needed in our case is (...) less smaller. (shrink)

In the current debate about same-sex marriage, the great majority of writers belong to one of two camps: either completely in favor of same-sex marriage or completely against it. No effort is typically made to treat different dimensions of the problem differently. My approach, however, is to distinguish between two dimensions of the problem—between the right to marry a person of the same sex on the one hand, and the right to obtain public recognition of such marriage, on the other (...) hand. It turns out, then, that the best solution to the problem of samesex marriage may actually fall between the opposing camps, between unqualified rejection and unqualified recognition of same-sex marriage. Same-sex marriage ceremonies ought to be lawful, hence tolerated, but same-sex marriage need not be recognized; the benefits and protections of the marriage license may be denied to same-sex couples without discriminating against them. If sound, the argument of this paper as a whole demonstrates that, in the matter of same-sex marriage, a liberal democratic society, by virtue of the scope and flexibility of its institutions, is capable of reconciling majority rule and tradition with the demands of justice. (shrink)

Many people believe that it is either morally obligatory, preferable or beneficial for an expectant father to be present at the delivery of his baby. An examination of the research literature, however, reveals no benefit that is generally available to participants. I argue, in addition, that it is not morally obligatory for an expectant father to be present at the delivery of his baby.

This note documents Aumann's reason for omitting the “empty shells” argument for the common prior assumption from the final version of “Correlated Equilibrium as an Expression of Bayesian Rationality.” It then continues to discuss the argument and concludes that rational entities cannot learn their own identity; if they do not know it a priori, they never will.

Economic theory reduces the concept of rationality to internal consistency. As far as beliefs are concerned, rationality is equated with having a prior belief over a “Grand State Space”, describing all possible sources of uncertainties. We argue that this notion is too weak in some senses and too strong in others. It is too weak because it does not distinguish between rational and irrational beliefs. Relatedly, the Bayesian approach, when applied to the Grand State Space, is inherently incapable of describing (...) the formation of prior beliefs. On the other hand, this notion of rationality is too strong because there are many situations in which there is not sufficient information for an individual to generate a Bayesian prior. It follows that the Bayesian approach is neither sufficient not necessary for the rationality of beliefs. (shrink)

Belongingness is a central biopsychosocial system. Challenges to belongingness (i.e. exclusion/ostracism) engender robust negative effects on affect and cognitions. Whether overinclusion – getting more than one’s fair share of social attention – favourably impacts affect and cognitions remains an open question. This pre-registered meta-analysis includes twenty-two studies (N = 2757) examining overinclusion in the context of the Cyberball task. We found that the estimated overall effect size of overinclusion on positive affect was small but robust, and the effect on fundamental (...) needs cognitions (belongingness, self-esteem, meaningful existence and control) was moderate in size and positive in direction. Notably, the effect sizes of overinclusion were smaller than the corresponding effects of exclusion. Finally, the effects of overinclusion on positive affect were greater for high, as compared to low, socially anxious individuals. Exploring the sequelae of the full range of inclusion experiences – from exclusion to overinclusion – may enrich our understanding of the functioning of the belongingness system as well as its interaction with another central biosocial system – the social status system. (shrink)

Book Reviews Olivier Roy, Economics and Philosophy, FirstView Article.

The question of whether a liberal state ought to recognize same-sex marriage must be situated within a broader inquiry into the proper relationship between political liberalism and marriage simpliciter. This general inquiry invites a diverse set of responses to the narrower question.A first widely held view—call it thick marital egalitarianism—sees a straightforward link from central liberal values, such as neutrality, equality, and nondiscrimination, to the full and equal inclusion of all willing partnerships into the thickly constituted, state-defined institution of marriage. (...) A second very different account—call it thin marital egalitarianism—sees the liberal commitment to neutrality as requiring a minimal legal framework of support for caring relationships sans additional antecedent restrictions, such as those thickly defining their nature or their purpose . Finally, a third important view—call it liberal marital contractualism—holds that this kind of "minimal marriage" is not minimal enough; a liberal state ought to treat marriage as a primarily "private affair worked out between or among partners, with [its] involvement limited to the enforcement of general laws and particular contracts that are individually designed within a defensible system of contract law". (shrink)