In order to accommodate empirically observed violations of the independence axiom of expected utility theory Becker and Sarin (1987) proposed their model of lottery dependent utility in which the utility of an outcome may depend on the lottery being evaluated. Although this dependence is intuitively very appealing and provides a simple functional form of the resulting decision criterion, lottery dependent utility has been nearly completely neglected in the recent literature on decision (...) making under risk. The goal of this paper is to revive the lottery dependent utility model. Therefore, we derive first a sound axiomatic foundation of lottery dependent utility. Secondly, we develop a discontinuous variant of the model which can accommodate boundary effects and may lead to a lexicographic non-expected utility model. Both analyses are accompanied by considering some functional specifications which are in accordance with recent experimental results and may have significant applications in business and management science. (shrink)

The possibility to interpret expected and nonexpected utility theories in purely probabilistic terms has been recently investigated. Such interpretation proposes as guideline for the Decision Maker the comparison of random variables through their probability to outperform a stochastic benchmark. We apply this type of analysis to the model of Becker and Sarin, showing that their utility functional may be seen as the probability that an opportune random variable, depending on the one to be evaluated, does not outperform a (...) non-random benchmark. Further, the consequent choice criterion is equivalent to a sort of probability of ruin. Possible interpretations and financial examples are discussed. (shrink)

Luce and Narens (Journal of Mathematical Psychology, 29:1–72, 1985) showed that rank-dependent utility (RDU) is the most general interval scale utility model for binary lotteries. It can be easily established that this result cannot be generalized to lotteries with more than two outcomes. This article suggests several additional conditions to ensure RDU as the only utility model with the desired property of interval scalability in the general case. The related axiomatizations of some special cases of RDU (...) of independent interest (the quantile utility, expected utility, and Yaari’s dual expected utility) are also given. (shrink)

This note is a generalization and improved interpretation of the main result of Karni and Schmeidler. A decision-maker is supposed to possess a preference relation on acts and another preference relation on state-prize lotteries, both of which are assumed to satisfy the von Neumann–Morgenstern axioms. In addition, the two preference relations restricted to a state of nature are assumed to agree. We show that these axioms are necessary and sufficient for the existence of subjective expected utility over acts with (...) state-dependent utility functions and a subjective probability measure. This subjective probability measure is unique when conditioned on the set of states of nature in which not all the prizes are equally desirable. (shrink)

We develop a model of Disappointment in which disappointment and elation arise from comparing the outcome received, not with an expected value as in previous models, but rather with the other individual outcomes of the lottery. This approach may better reflect the way individuals are liable to experience disappointment. The model obtained accounts for classic behavioral deviations from the normative theory, offers a richer structure than previous disappointment models, and leads to a Rank-Dependent Utility formulation in a (...) transparent way. Thus, our disappointment model may provide a clear psychological rationale for the subjective transformation of probabilities. (shrink)

Modeling risk in a prescriptively plausible way represents a major issue in decision theory. The benchmarking procedure, being based on the satisficing principle and providing a probabilistic interpretation of expected utility (EU) theory, is prescriptive. Because it is a target-based language, the benchmarking procedure can be applied naturally to finance. In finance, the centrality of risk is widely recognized, but the risk measures that are commonly used to assess risk are too poor as a decision making tool. In this (...) paper we propose a two-stage decision criterion of choice under risk that provides an application of benchmarking to finance through a risk measure. We will analyze some nonexpected utility theories, in particular lottery dependent utility, as potential frameworks for our criterion. (shrink)

Since utilities and probabilities jointly determine choices, event-dependent utilities complicate the elicitation of subjective event probabilities. However, for the usual purpose of obtaining the information embodied in agent beliefs, it is sufficient to elicit objective probabilities, i.e., probabilities obtained by updating a known common prior with that agent’s further information. Bayesians who play a Nash equilibrium of a certain insurance game before they obtain relevant information will afterward act regarding lottery ticket payments as if they had event-independent risk-neutral (...) utility and a known common prior. Proper scoring rules paid in lottery tickets can then elicit objective probabilities. (shrink)

In many real-world gambles, a non-trivial amount of time passes before the uncertainty is resolved but after a choice is made. An individual may have a preference between gambles with identical probability distributions over final outcomes if they differ in the timing of resolution of uncertainty. In this domain, utility consists not only of the consumption of outcomes, but also the psychological utility induced by an unresolved gamble. We term this utility anxiety. Since a reflective decision maker (...) may want to include anxiety explicitly in analysis of unresolved lotteries, a multiple-outcome model for evaluating lotteries with delayed resolution of uncertainty is developed. The result is a rank-dependent utility representation (e.g., Quiggin, 1982), in which period weighting functions are related iteratively. Substitution rules are proposed for evaluating compound temporal lotteries. The representation is appealing for a number of reasons. First, probability weights can be interpreted as the cognitive attention allocated to certain outcomes. Second, the model disaggregates strength of preference from temporal risk aversion and thus provides some insight into the old debate about the relationship between von Neumann–Morgenstern utility functions and strength of preference value functions. (shrink)

The paper characterizes axiomatically a class of temptation-driven preferences. The key (but not the only) novelty of the paper is the idea that the alternative which tempts when an item x is consumed may not be the same as the alternative which tempts when another item y is consumed. For any single item to be ultimately consumed, the other items can be ranked by how much they tempt. An individual contemplates, as an alternative consumption, only the item that tempts most. (...) The utility of a menu is then equal to the utility of the item that is consumed less a (psychological) cost of resisting temptation; this cost depends on both: the item to be consumed and the item that tempts. Unlike most of the existing literature, the axioms are imposed on deterministic menus, not on menus of lotteries. (shrink)

This paper presents the results of two experiments designed to test violations of Subjective Expected Utility Theory (SEUT) within a sample of Italian trade union delegates and leaders. Subjects priced risky and ambiguous prospects in the domain of gains. Risky prospects were based on games of chance, while ambiguous prospects were built on the standard Ellsberg paradox and on event lotteries whose outcomes were based either on the results of a fictional election or on the future results of the (...) 1999 European Parliamentary election in Italy and the U.K. The experiments show that, although risky prospects were priced at their expected values on average, trade union delegates and leaders did violate SEUT when assessing ambiguous prospects. Moreover, their behaviour depended on the source of uncertainty (Ellsberg paradox vs. electoral results; fictional vs. real election; Italy vs. U.K. election outcomes). We discuss the implications of these results for the economic theory of the trade union. (shrink)

Several axiom systems for preference among acts lead to a unique probability and a state-independent utility such that acts are ranked according to their expected utilities. These axioms have been used as a foundation for Bayesian decision theory and subjective probability calculus. In this article we note that the uniqueness of the probability is relative to the choice of whatcounts as a constant outcome. Although it is sometimes clear what should be considered constant, in many cases there are several (...) possible choices. Each choice can lead to a different "unique" probability and utility. By focusing attention on statedependent utilities, we determine conditions under which a truly unique probability and utility can be determined from an agent's expressed preferences among acts. Suppose that an agent's preference can be represented in terms of a probability P and a utility U.That is, the agent prefers one act to another iff the expected utility of that act is higher than that of the other. There are many other equivalent representations in terms of probabilities Q, which are mutually absolutely continuous with P, and state-dependent utilities V, which differ from U by possibly different positive affine transformations in each state of nature. We describe an example in which there are two different but equivalent state-independent utility representations for the same preference structure. They differ in which acts count as constants. The acts involve receiving different amounts of one or the other of two currencies, and the states are different exchange rates between the currencies. It is easy to see how it would not be possible for constant amounts of both currencies to have simultaneously constant values across the differentstates. Savage (1954, sec. 5.5) discovered a situation in which two seemingly equivalent preference structures are represented by different pairs of probability and utility. He attributed the phenomenon to the construction of a "small world." We show that the small world problem is just another example of two different, but equivalent, representations treating different actsas constants. Finally, we prove a theorem (similar to one of Karni 1985) that shows how to elicit a unique state-dependent utility and does not assume that there are prizes with constant value. To do this, we define a new hypothetical kind of act in which both the prize to be awarded and the state of nature are determined by an auxiliary experiment. (shrink)

Savage's framework of subjective preference among acts provides a paradigmatic derivation of rational subjective probabilities within a more general theory of rational decisions. The system is based on a set of possible states of the world, and on acts, which are functions that assign to each state a consequence€. The representation theorem states that the given preference between acts is determined by their expected utilities, based on uniquely determined probabilities (assigned to sets of states), and numeric utilities assigned to consequences. (...) Savage's derivation, however, is based on a highly problematic well-known assumption not included among his postulates: for any consequence of an act in some state, there is a "constant act" which has that consequence in all states. This ability to transfer consequences from state to state is, in many cases, miraculous -- including simple scenarios suggested by Savage as natural cases for applying his theory. We propose a simplification of the system, which yields the representation theorem without the constant act assumption. We need only postulates P1-P6. This is done at the cost of reducing the set of acts included in the setup. The reduction excludes certain theoretical infinitary scenarios, but includes the scenarios that should be handled by a system that models human decisions. (shrink)

State-dependent utility is a problem for the behavioural branch of decision theory under uncertainty. It questions the very possibility that beliefs be revealed by choice data. According to the current literature, all models of beliefs are equally exposed to the problem. Moreover, the problem is solvable only when the decision-maker can influence the resolution of uncertainty. This article gives grounds to reject these two views. The various models of beliefs can be shown to be unequally exposed to the (...) problem of state-dependent utility. The problem can be argued to be solved even when the decision-maker has no influence over the resolution of uncertainty. The implications of such reappraisal for a philosophical appreciation of the revealed preference methodology are discussed. (shrink)

This paper explores how the Bayesian program benefits from allowing for objective chance as well as subjective degree of belief. It applies David Lewis’s Principal Principle and David Christensen’s principle of informed preference to defend Howard Raiffa’s appeal to preferences between reference lotteries and scaling lotteries to represent degrees of belief. It goes on to outline the role of objective lotteries in an application of rationality axioms equivalent to the existence of a utility assignment to represent preferences in Savage’s (...) famous omelet example of a rational choice problem. An example motivating causal decision theory illustrates the need for representing subjunctive dependencies to do justice to intuitive examples where epistemic and causal independence come apart. We argue to extend Lewis’s account of chance as a guide to epistemic probability to include De Finetti’s convergence results. We explore Diachronic Dutch book arguments as illustrating commitments for treating transitions as learning experiences. Finally, we explore implications for Martingale convergence results for motivating commitment to objective chances. (shrink)

The Expected Shortfall or Conditional Value-at-Risk (CVaR) has been playing the role of main risk measure in the recent years and paving the way for an enormous number of applications in risk management due to its very intuitive form and important coherence properties. This work aims to explore this measure as a probability-dependent utility functional, introducing an alternative view point for its Choquet Expected Utility representation. Within this point of view, its main preference properties will be characterized (...) and its utility representation provided through local utilities with an explicit dependence on the assessed revenue’s distribution (quantile) function. Then, an intuitive interpretation for the related probability dependence and the piecewise form of such utility will be introduced on an investment pricing context, in which a CVaR maximizer agent will behave in a relativistic way based on his previous estimates of the probability function. Finally, such functional will be extended to incorporate a larger range of risk-averse attitudes and its main properties and implications will be illustrated through examples, such as the so-called Allais Paradox. (shrink)

In this paper, I investigate the betting behavior of a decision-maker who can influence the likelihood of the events upon which she is betting. In decision theory, this is best known as a situation of moral hazard. Focusing on a particularly simple case, I sketch the first systematic analysis of moral hazard in the canonical Savage framework. From the results of this analysis, I draw two philosophical conclusions. First, from an observational and a descriptive point of view, there need to (...) be no incompatibility between moral hazard and the Savage framework. This qualifies the incompatibility view, that is ubiquitous in decision theory. Second, in general, moral hazard is not sufficient to overcome the challenges posed by state-dependent utility to the behavioral identification of beliefs. This qualifies the sufficiency view, that is influential in decision theory. These two philosophical conclusions are the main contributions of my paper. (shrink)

When preferences are such that there is no unique additive prior, the issue of which updating rule to use is of extreme importance. This paper presents an axiomatization of the rule which requires updating of all the priors by Bayes rule. The decision maker has conditional preferences over acts. It is assumed that preferences over acts conditional on event E happening, do not depend on lotteries received on Ec, obey axioms which lead to maxmin expected utility representation with multiple (...) priors, and have common induced preferences over lotteries. The paper shows that when all priors give positive probability to an event E, a certain coherence property between conditional and unconditional preferences is satisfied if and only if the set of subjective probability measures considered by the agent given E is obtained by updating all subjective prior probability measures using Bayes rule. (shrink)

Which is better: a guarantee of a modest amount of moral value, or a tiny probability of arbitrarily large value? To prefer the latter seems fanatical. But, as I argue, avoiding such fanaticism brings severe problems. To do so, we must decline intuitively attractive trade-offs; rank structurally identical pairs of lotteries inconsistently, or else admit absurd sensitivity to tiny probability differences; have rankings depend on remote, unaffected events ; and often neglect to rank lotteries as we already know we would (...) if we learned more. Compared to these implications, fanaticism is highly plausible. (shrink)

We compare two different elicitation methods for measuring risk attitudes on a sample of French farmers. We consider the lottery tasks initially proposed by Holt and Laury (Econ Rev 92:1644–1655, 2002) and by Eckel and Grossman (Evol Hum Behav 23:281–295, 2002; J Econ Behav Org 68:1–7, 2008). The main empirical result from this within-subject study is that risk preference measures are affected by the type of mechanism used. We first show that this risk preference instability can be related to (...) non-expected utility preferences of farmers. Using a risk-taking psychometric questionnaire, we then demonstrate that risk preferences of farmers are context-dependent. This may be another explanation of the observed risk preference instability. (shrink)

In Kőszegi and Rabin’s reference-dependent model of preferences, the chance of obtaining a better outcome can reduce an agent’s expected utility through an increase in the stochastic reference point. This means that individuals may prefer stochastically dominated lotteries. In this sense, hope, understood as a small probability of a better outcome, can be a curse. While Kőszegi and Rabin focus on a linear specification of the utility function, we show that this effect occurs more broadly. Using fairly (...) plausible assumptions and parameter values, we specify the conditions under which it occurs, as well as the type of lotteries in which this should be expected. We then show that while a simple subjective transformation of probability into weights of the reference point may in some cases mitigate the issue, in others, it can intensify it or even generate new ones. Finally, we extend the model by adding the individual’s current reference point to the stochastic reference point. We show that this modification can reconcile Kőszegi and Rabin’s model with the apparent empirical infrequency of stochastically dominated choices while maintaining its main qualitative results. (shrink)

The lottery paradox can be solved if epistemic justification is assumed to be a species of permissibility. Given this assumption, the starting point of the paradox can be formulated as the claim that, for each lottery ticket, I am permitted to believe that it will lose. This claim is ambiguous between two readings, depending on the scope of ‘permitted’. On one reading, the claim is false; on another, it is true, but, owing to the general failure of permissibility (...) to agglomerate, does not generate the paradox. The solution generalizes to formulations of the paradox in terms of rational acceptability and doxastic rationality. (shrink)

This commentary considers Merker's mesodiencephalic proposal in relation to quantitative measures of neural dynamics suggested to be relevant to consciousness. I suggest that even if critical neural mechanisms turn out to be subcortical, the functional utility of consciousness will depend on the rich conscious contents generated by continuous interaction of such mechanisms with a thalamocortical envelope. (Published Online May 1 2007).

In this article, I discuss three distinct but related puzzles involving lotteries: Kyburg’s lottery paradox, the statistical evidence problem, and the Harman-Vogel paradox. Kyburg’s lottery paradox is the following well-known problem: if we identify rational outright belief with a rational credence above a threshold, we seem to be forced to admit either that one can have inconsistent rational beliefs, or that one cannot rationally believe anything one is not certain of. The statistical evidence problem arises from the observation (...) that people seem to resist forming outright beliefs whenever the available evidence for the claim under consideration is purely statistical. We need explanations of whether it is in fact irrational to form such beliefs, and of whether a clear distinction can be drawn between statistical and non-statistical evidence. The Harman-Vogel paradox is usually presented as a paradox about knowledge: we tend to assume that we can know so-called ordinary propositions, such as the claim that I will be in Barcelona next spring. Yet, we hesitate to make knowledge claims regarding so-called lottery propositions, such as the claim that I won’t die in a car crash in the next few months, even if these lottery propositions are obviously entailed by the ordinary propositions we claim to know. Depending on one’s view about the relationship between rational belief and knowledge, the Harman-Vogel paradox has ramifications for a theory of rational outright belief. Formal theories of the relationship between rational credence and rational belief, such as Leitgeb’s stability theory, tend to focus mostly on handling Kyburg’s lottery paradox, but not the other two puzzles I mention. My aim in this article is to draw out relationships and differences between the puzzles, and to examine to what extent existing formal solutions to Kyburg’s lottery paradox help with answering the statistical evidence problem and the Harman-Vogel paradox. (shrink)

In ‘Fair Infinite Lotteries’ (FIL), Wenmackers and Horsten use non-standard analysis to construct a family of nicely-behaved hyperrational-valued probability measures on sets of natural numbers. Each probability measure in FIL is determined by a free ultrafilter on the natural numbers: distinct free ultrafilters determine distinct probability measures. The authors reply to a worry about a consequent ‘arbitrariness’ by remarking, “A different choice of free ultrafilter produces a different ... probability function with the same standard part but infinitesimal differences.” They illustrate (...) this remark with the example of the sets of odd and even numbers. Depending on the ultrafilter, either each of these sets has probability 1/2, or the set of odd numbers has a probability infinitesimally higher than 1/2 and the set of even numbers infinitesimally lower. The point of the current paper is simply that the amount of indeterminacy is much greater than acknowledged in FIL: there are sets of natural numbers whose probability is far more indeterminate than that of the set of odd or the set of even numbers. (shrink)

This article is concerned with the representation of preferences which do not satisfy the ordinary axioms for state-independent utilities. After suggesting reasons for not being satisfied with solutions involving state-dependent utilities, an alternative representation shall be proposed involving state-independent utilities and a situation-dependent factor. The latter captures the interdependencies between states and consequences. Two sets of axioms are proposed, each permitting the derivation of subjective probabilities, state-independent utilities, and a situation-dependent factor, and each operating in a different (...) framework. The first framework involves the concept of a decision situation—consisting of a set of states, a set of consequences and a preference relation on acts; the probabilities, utilities and situation-dependent factor are elicited by referring to other, appropriate decision situations. The second framework, which is technically related, operates in a fixed decision situation; particular “subsituations” are employed in the derivation of the representation. Possible interpretations of the situation-dependent factor and the notion of situation are discussed. (shrink)

Matthew Adler's Measuring Social Welfare is an introduction to the social welfare function (SWF) methodology. This essay questions some ideas at the core of the SWF methodology having to do with the relation between the SWF and the measure of well-being. The facts about individual well-being do not single out a particular scale on which well-being must be measured. As with physical quantities, there are multiple scales that can be used to represent the same information about well-being; no one scale (...) is special. Like physical laws, the SWF and its ranking of distributions cannot depend on exactly which of these scales we use. Adler and other theorists in the SWF tradition have used this idea to derive highly restrictive constraints on the shape of the SWF. These constraints rule out seemingly plausible views about distributive justice and population ethics. I argue, however, that these constraints stem from a simple but instructive mistake. The SWF should not be applied to vectors of numbers such as 1 and 2, but rather to vectors of dimensioned quantities such as 1 util and 2 utils. This seemingly pedantic suggestion turns out to have far-reaching consequences. Unlike the orthodox SWF approach, treating welfare levels as dimensioned quantities lets us distinguish between real changes in well-being and mere changes in the unit of measurement. It does this without making the SWF depend on the scale on which welfare is measured, and in a way that avoids the restrictive constraints on the shape of the SWF. (shrink)

Consider a subjective expected utility preference relation. It is usually held that the representations which this relation admits differ only in one respect, namely, the possible scales for the measurement of utility. In this paper, I discuss the fact that there are, metaphorically speaking, two additional dimensions along which infinitely many more admissible representations can be found. The first additional dimension is that of state-dependence. The second—and, in this context, much lesser-known—additional dimension is that of act-dependence. The simplest (...) implication of their usually neglected existence is that the standard axiomatizations of subjective expected utility fail to provide the measurement of subjective probability with satisfactory behavioral foundations. (shrink)

As an application of his Material Theory of Induction, Norton (2018; manuscript) argues that the correct inductive logic for a fair infinite lottery, and also for evaluating eternal inflation multiverse models, is radically different from standard probability theory. This is due to a requirement of label independence. It follows, Norton argues, that finite additivity fails, and any two sets of outcomes with the same cardinality and co-cardinality have the same chance. This makes the logic useless for evaluating multiverse models (...) based on self-locating chances, so Norton claims that we should despair of such attempts. However, his negative results depend on a certain reification of chance, consisting in the treatment of inductive support as the value of a function, a value not itself affected by relabeling. Here we define a purely comparative infinite lottery logic, where there are no primitive chances but only a relation of ‘at most as likely’ and its derivatives. This logic satisfies both label independence and a comparative version of additivity as well as several other desirable properties, and it draws finer distinctions between events than Norton's. Consequently, it yields better advice about choosing between sets of lottery tickets than Norton's, but it does not appear to be any more helpful for evaluating multiverse models. Hence, the limitations of Norton's logic are not entirely due to the failure of additivity, nor to the fact that all infinite, co-infinite sets of outcomes have the same chance, but to a more fundamental problem: We have no well-motivated way of comparing disjoint countably infinite sets. (shrink)

We provide welfarist evaluations of decision rules for federations of states and consider models, under which the interests of people from different states are stochastically dependent. We concentrate on two welfarist standards; they require that the expected utility for the federation be maximized or that the expected utilities for people from different states be equal. We discuss an analytic result that characterizes the decision rule with maximum expected utility, set up a class of models that display interstate (...) dependencies and run simulations for different dependency scenarios in the European Union. We find that, under positive correlations, the welfare distribution tends to be less sensitive to the choice of the decision rule, whereas it can be important under negative correlations. The results that Beisbart and Bovens (SCW 29, p. 581, 2007) have found for two types of models without interstate dependencies are relatively stable. There are exceptions, though, under which the way the welfare distribution is shaped by a decision rule is significantly affected by dependencies. (shrink)

In the first chapter of his Knowledge and Lotteries, John Hawthorne argues that thinkers do not ordinarily know lottery propositions. His arguments depend on claims about the intimate connections between knowledge and assertion, epistemic possibility, practical reasoning, and theoretical reasoning. In this paper, we cast doubt on the proposed connections. We also put forward an alternative picture of belief and reasoning. In particular, we argue that assertion is governed by a Gricean constraint that makes no reference to knowledge, and (...) that practical reasoning has more to do with rational degrees of belief than with states of knowledge. (shrink)

There are decision problems where the preferences that seem rational to many people cannot be accommodated within orthodox decision theory in the natural way. In response, a number of alternatives to the orthodoxy have been proposed. In this paper, I offer an argument against those alternatives and in favour of the orthodoxy. I focus on preferences that seem to encode sensitivity to risk. And I focus on the alternative to the orthodoxy proposed by Lara Buchak’s risk-weighted expected utility theory. (...) I will show that the orthodoxy can be made to accommodate all of the preferences that Buchak’s theory can accommodate. (shrink)

One objection to embryonic stem (ES) cell research is that it ‘cannibalizes’ human beings, that is, kills some human beings to benefit others. I grant for argument’s sake that the embryo is a person. Nonetheless, killing it may be justified. I show this through the Embryonic Stem Cell Lottery. Whether killing a person is justified depends on: (1) whether innocent people at risk of being killed for ES cell research also stand to benefit from the research and (2) whether (...) their overall chances of living are higher in a world in which killing and ES cell research is conducted. I call this kind of killing ‘risk reductive.‘. (shrink)

How does logic relate to rational belief? Is logic normative for belief, as some say? What, if anything, do facts about logical consequence tell us about norms of doxastic rationality? In this paper, we consider a range of putative logic-rationality bridge principles. These purport to relate facts about logical consequence to norms that govern the rationality of our beliefs and credences. To investigate these principles, we deploy a novel approach, namely, epistemic utility theory. That is, we assume that doxastic (...) attitudes have different epistemic value depending on how accurately they represent the world. We then use the principles of decision theory to determine which of the putative logic-rationality bridge principles we can derive from considerations of epistemic utility. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:328 HUME, MIRACLES AND LOTTERIES This paper addresses recent criticisms of Hume's skepticism with regard to miracles, by 1 2 Sorensen and Hambourger who argue that there are counterexamples, illustrated by lotteries, to Hume's account of how the truth of reports of improbable events (either first or second hand) must be evaluated. They believe these counterexamples are sufficient to prove that Hume's argument against the believability of miracles, defined (...) as violations of laws of nature caused by God, is unsound. Their arguments merit consideration not only in their own right but also on the basis of historical precedent, since they have in common an assumption that is found in Butler's criticism of Hume's predecessors in this debate. The bulk of my paper deals with Hambourger, who presents the most detailed version of the 'Butler' criticism. Sorensen's version can be answered in light of the evaluation of Hambourger 's argument. Hume's Argument Hume's argument is not against the possibility of miracles but against the possibility that it could ever be reasonable to believe a miracle 4 had occurred. His argument can be summed up as follows: in judging the credibility of a report of an improbable event, the probability of the event must be weighed against the probability that the report could be mistaken. The probability of an event is determined by the degree to which it conforms to known laws of nature. Laws of nature are formulated on the basis of uniform experience. Assuming that a miracle is a violation of laws of nature, any judgment that an event is miraculous presupposes a 329 judgment that there exists a uniform pattern of causation to which it is opposed, which pattern would constitute empirical proof against the miracle's occurrence. Testimony, on the other hand, is shown by experience not to be uniformly reliable. Consequently, no report of a miracle will have credibility since there will always be a uniform experience that is full proof against it, which therefore outweighs whatever merits testimony may have. In Hume's words, [N]o testimony is sufficient to establish a miracle, unless the testimony be of such a kind, that its falsehood would be more miraculous, than the fact, which it endeavors to establish.... When anyone tells me, that he saw a dead man restored to life, I immediately consider with myself, whether it be more probable, that this person should either deceive or be deceived, or that the fact, which he relates, should really have happened.... If the falsehood of his testimony would be more miraculous, than the event which he relates; then, and not till- then, can he pretend to command my belief or opinion (E 115-116). Hambourger 's Criticism Hambourger maintains that Hume's argument depends on a principle which he calls the "principle of relative likelihood." He restates this principle as follows: Suppose that someone or, perhaps, a group of people testify to the truth of a proposition P that, considered by itself, is improbable. Then to evaluate the testimony, one must weight (sic) the probability that P is true against the probability that the informants are lying or mistaken. If it is more likely that P is true than that the informants are lying or mistaken, then, on balance, the 330 testimony renders P more likely than not, and it may be reasonable for one to believe that P. However, if it is as likely, or even more likely, that the informants are lying or mistaken than it is that P is true, then, on balance, the testimony does not render P more likely true than false, and it would not be,reasonable for one to believe that P. As a counterexample to this principle, Hambourger asks us to suppose that a lottery is held in which there are one million entrants, each of whom has a one in a million chance of winning, and that a reliable newspaper, the New York Times, reports that the winner of the lottery is Smith. He further asks us to suppose that the Times errs only once out of every 10,000 times. Thus, the probability that the Times ' report is wrong is... (shrink)

Expected utility theory does not directly deal with the utility of chance. It has been suggested in the literature (Samuelson, 1952, Markowitz, 1959) that this can be remedied by an approach which explicitly models the emotional consequences which give rise to the utility of chance. We refer to this as the elaborated outcomes approach. It is argued that the elaborated outcomes approach destroys the possibility of deriving a representation theorem based on the usual axioms of expected (...) class='Hi'>utility theory. This is shown with the help of an example due to Markowitz. It turns out that the space of conceivable lotteries over elaborated outcomes is too narrow to permit the application of the axioms. Moreover it is shown that a representation theorem does not hold for the example. (shrink)

We present a compositional semantics for first-order logic with imperfect information that is equivalent to Sevenster and Sandu’s equilibrium semantics (under which the truth value of a sentence in a finite model is equal to the minimax value of its semantic game). Our semantics is a generalization of an earlier semantics developed by the first author that was based on behavioral strategies, rather than mixed strategies.

Despite worries about the fairness of lotteries or the sources of the human psyche’s strong attraction to them, Americans have made lotteries a part of their civic lives. The popularity of gaming does not, however, gainsay the unease many Americans feel about state sponsorship of lotteries. The debates that surrounded the introduction of lotteries remain to this day, but the arguments are tired and the camps deadlocked. One camp argues that a lottery is simply a properly randomized drawing that (...) determines who among a freely chosen group of participants shall be awarded all or some of the monetary contributions of the group. These proponents suggest that the randomness of the drawing and the autonomy of the participants render the lottery fair and sponsorship by the state unobjectionable. Opponents of state-supported gambling argue, by contrast, that states market lotteries by making inappropriate emotional appeals and by supplying information of dubious veracity. Consequently, so this group argues, lotteries must be judged as unfair gaming devices and state support viewed as improper. I shall show that both camps have fundamentally misunderstood the problem. Evaluating whether state lotteries are sales or swindles relies neither on an analysis of subjective attitudes nor on an examination of purely procedural aspects of play. Correct analysis depends on a determination of what lotteries are. That is, there is a difference between claiming what a lottery does and what it claims to be, between how it works and what it is. If a lottery is claimed to be something that it is not, then regardless of what one gets for one’s money, one has been swindled. I will show that performing an ontological examination of the state-supported lottery reveals it to be a swindle. I conclude by suggesting that some of the confusion regarding the legitimacy of the state-sponsored lottery stems from misunderstandings of several tenets of liberalism. It is these misunderstandings that at times are employed to justify lotteries. (shrink)