Great Expectations. Part I: On the Customizability of Generalized Expected Utility

We propose a generalization of expected utility that we call generalized EU (GEU), where a decision maker’s beliefs are represented by plausibility measures and the decision maker’s tastes are represented by general (i.e., not necessarily real-valued) utility functions. We show that every agent, “rational” or not, can be modeled as a GEU maximizer. We then show that we can customize GEU by selectively imposing just the constraints we want. In particular, we show how each of Savage’s postulates corresponds to constraints on GEU.     

Choices Under Ambiguity With Familiar And Unfamiliar Outcomes

This paper considers a decision-making process under ambiguity in which the decision-maker is supposed to split outcomes between familiar and unfamiliar ones. She is assumed to behave differently with respect to unfamiliar gains, unfamiliar losses and customary (familiar) outcomes. In particular, she is supposed to be pessimistic on gains, optimistic on losses and ambiguity neutral on the familiar outcomes. A generalization of the usual Choquet Integral is formalized when the decision maker holds capacities and probabilities. A characterization of the decision-maker’s behavior is provided for a specific subset of capacities, in which it is shown that the decision-maker underestimates the unfamiliar outcomes while is linear in probabilities on customary ones.     

Conditional Desirability

Conditional attitudes are not the attitudes an agent is disposed to acquire in event of learning that a condition holds. Rather they are the components of agent's current attitudes that derive from the consideration they give to the possibility that the condition is true. Jeffrey's decision theory can be extended to include quantitative representation of the strength of these components. A conditional desirability measure for degrees of conditional desire is proposed and shown to imply that an agent's degrees of conditional belief are conditional probabilities. Rational conditional preference is axiomatised and by application of Bolker's representation theorem for rational preferences it is shown that conditional preference rankings determine the existence of probability and desirability measures that agree with them. It is then proven that every conditional desirability function agrees with an agent's conditional preferences and, under certain assumptions, every desirability function agreeing with an agent's conditional preferences is a conditional desirability function agreeing with her unconditional preferences.     

The implications of irreversibility in emergency response decisions

The irreversibility effect implies that a decision maker who neglects the prospect of receiving more complete information at later stages of a sequential decision problem will in certain cases too easily take an irreversible decision, as he ignores the existence of a positive option value in favour of reversible decisions. This option value represents the decision maker's flexibility to adapt subsequent decisions to the obtained information. In this paper we show that the economic models dealing with irreversibility as used in environmental and capital investment decision making can be extended to emergency response decisions that produce important irreversible effects. In particular, we concentrate on the decision whether or not to evacuate an industrial area threatened by a possible nuclear accident. We show in a simple two-period evacuation decision model that non-optimal conclusions may be drawn when evacuation is regarded as a `now or never decision'. The robustness of these results is verified by means of a sensitivity analysis of the various model parameters. The importance of `options thinking' in this decision context is illustrated in an example.     

A Test of the Principle of Optimality

This paper reports on an experimental test of the Principle of Optimality in dynamic decision problems. This Principle, which states that the decision-maker should always choose the optimal decision at each stage of the decision problem, conditional on behaving optimally thereafter, underlies many theories of optimal dynamic decision making, but is normally difficult to test empirically without knowledge of the decision-maker's preference function. In the experiment reported here we use a new experimental procedure to get round this difficulty, which also enables us to shed some light on the decision process that the decision-maker is using if he or she is not using the Principle of Optimality - which appears to be the case in our experiments.     

Causality in the logic of decision

In recent years there has been an active debate between proponents of two different models of rational decision. One model is evidential decision theory, which is characterized by the fact that it holds the principle of maximizing expected utility to be appropriate whenever the states are probabilistically independent of the acts. The other model, causal decision theory, holds that the principle of maximizing expected utility is appropriate whenever the states are causally independent of the acts. The proponents of evidential decision theory include Richard Jeffrey and Ellery Eells, who claim that evidential decision theory has significant advantages over causal decision theory. In this paper I discuss the two main advantages which have been claimed for evidential decision theory, and show that in fact evidential decision theory does not possess either of these advantages.     

Two applications of a theorem of Dvoretsky, Wald, and Wolfovitz to cake division

In this note, we show that a partition of a cake is Pareto optimal if and only if it maximizes some convex combination of the measures used by those who receive the resulting pieces of cake. Also, given any sequence of positive real numbers that sum to one (which may be thought of as representing the players' relative entitlements), we show that there exists a partition in which each player receives either more than, less than, or exactly his or her entitlement (according to his or her measure), in any desired combination, provided that the measures are not all equal.     

Family participation in child protection practice: an observational study of family group meetings

Over the past two decades, child protection authorities internationally have begun to implement models of family participation in child protection decision‐making. Debate exists about the extent to which these models promote family involvement in decision‐making. While a significant body of research on family and professional experience and perceptions of models of family participation in decision‐making has emerged, there has been little observational research of these approaches. In this paper, we report on observational data from 11 family group meetings (FGMs) in a child protection context in Queensland, Australia. Under Queensland child protection law, these meetings are referred to as an inclusive process for child protection decision‐making and planning. We draw on observational data to analyse how family inclusion in child protection decision‐making is facilitated, or limited, by the FGM process. We consider tensions in the realization of a participatory ethos in child protection services systems and discuss what practitioners can practically do to enhance family participation in child protection decision‐making.     

The Effectiveness of Assigned Goals in Complex Financial Decision Making and the Importance of Gender

Evidence suggests that men are more confident and less risk averse in financial decision making. Researchers did not address how men and women respond differently to goals in financial decision situations, however. In the present study, men set more challenging personal goals and risked more resources than women in a complex financial decision task. Men did not report higher self-efficacy versus women. As expected, gender interacted with assigned goals to predict self-efficacy, risk behavior, and personal goals. Results concur with recent financial decision research that suggests men and women differ in their use of externally-provided information such as assigned goals. Suggestions for future research are offered and limitations are discussed.     

Effects of Outcome and Probabilistic Ambiguity on Managerial Choices

Information ambiguity is prevalent in organizations and likely influences management decisions. This study examines, given imprecise probabilities and outcomes, how managers make choices when they are provided with single-figure benchmarks. Seventy-nine MBA students completed two experiments. We found that, in a decision framed as a decision under certainty involving an ambiguous outcome, the majority of the subjects were ambiguity prone in the loss condition and switched to ambiguity aversion in the gain condition. However, in the presence of probabilistic ambiguity in a decision under risk, this expected switching pattern was shown only when the difference in riskiness between the two choice options (in the loss condition) was perceived to be relatively small. In a companion study, we used a written protocol approach to identify factors that affect decision makers' investment choices when faced with ambiguous outcomes. Protocols frequently mentioned that the ambiguous outcome option was risky, even in the case which was framed as a decision under certainty in the problem statement. In a decision under risk with ambiguous outcomes, the combination of probabilistic risk and outcome ambiguity was seen as even more risky.     

Race, racial resentment, attentiveness to the news media, and public opinion toward the Jena Six

Objective. We outline the role of race, racial resentment, and attentiveness to news in structuring public opinion toward the prosecution of the Jena Six, the name given to six African-American high school students who beat a white student, five of whom were subsequently charged with attempted second-degree murder.Method. We rely on a telephone survey of 428 registered voters collected in the aftermath of the protests in Jena, Louisiana.Results. Public reactions were heavily filtered by race and associated with measures of racial resentment. African Americans followed news about the protests more closely, believed race was the most important consideration in the decision to prosecute, and believed the decision to prosecute was the wrong decision. Racially conservative white respondents were less likely to believe race was the most important consideration in the decision to prosecute and were more likely to believe that the decision to prosecute was the right decision. Consistent with theories of agenda setting and framing, attentiveness to the news influenced perceptions regarding the importance of race in the decision to prosecute but not whether the decision was the right decision.Conclusions. At least within the context of the Deep South, race and racial attitudes continue to be an important predictor of public reactions to racially charged events. Attentiveness to the news influenced the lens through which events were interpreted, but not perceptions of whether the outcome was the right decision.     

行政决策的民主化探析

本文阐述了行政决策民主化的重要性,分析了目前行政决策的现状,并从行政决策的制度、流程、方式及公众参与等方面入手探讨了实现我国行政决策民主化的有效途径。     

Delivering decision making support to people with cognitive disability — What has been learned from pilot programs in Australia from 2010 to 2015

The UNCRPD has generated debate about supported decision making as a way to better enable people with cognitive disability to participate in decision making. In Australia, between 2010–2015, a series of projects have piloted various models of delivering decision making support. A critical review was conducted on the program documents and evaluations of these pilot projects. The pilots were small scale, conducted by both statutory and non‐statutory bodies, and adopted similar designs centred on supporting a decision maker/supporter dyad. Primarily, participants were people with mild intellectual disability. Themes included: positive outcomes; uncertain boundaries of decision support; difficulty securing supporters; positive value of program staff and support to supporters; limited experience and low expectations; and varying value of written resources. The lack of depth and rigour of evaluations mean firm conclusions cannot be reached about program logics, costs or outcomes of the pilots. The pilots demonstrate feasibility of providing support for decision making rather than resolving issues involved in delivering support. They suggest that some form of authority may facilitate the role of decision supporters, help to engage others in a person's life, and integrate decision making support across all life domains.     

Experimental evidence on case-based decision theory

This paper starts out from the proposition that case-based decision theory (CBDT) is an appropriate tool to explain human decision behavior in situations of structural ignorance. Although the developers of CBDT suggest its reality adequacy, CBDT has not yet been tested empirically very often, especially not in repetitive decision situations. Therefore, our main objective is to analyse the decision behavior of subjects in a repeated-choice experiment by comparing the explanation power of CBDT to reinforcement learning and to classical decision criteria under uncertainty namely maximin, maximax, and pessimism-optimism. Our findings substantiate a predominant significantly higher validity of CBDT compared to the classical criteria and to reinforcement learning. For this reason, the experimental results confirm the suggested reality adequacy of CBDT in repetitive decision situations of structural ignorance.     

Mean-risk decision analysis

Some decision theorists criticize expected utility decision analysis and propose mean-risk decision analysis as a replacement. They claim that expected utility decision analysis neglects attitudes toward risk whereas mean-risk decision analysis accords these attitudes their proper status. However mean-risk decision analysis and expected utility decision analysis are not incompatible, and it is advantageous for decision theory to develop each in a way that complements the other. Here I present a mean-risk rule that governs preferences among options and options given states. This mean-risk rule complements an expected utility rule that takes the utility of an option-state pair as the utility of the option given the state. I argue for the mean-risk rule using principles concerning basic intrinsic desires. The rule is comparative, but the last section offers some suggestions for its quantitative development.I am grateful for comments from my colleague, Henry E. Kyburg, Jr.     

On the foundations of decision making under partial information

We show how to model incompleteness in the decision maker's judgements, within a Bayesian context, providing axioms which lead us to work with families of values or probabilities and utilities. The proper solution concepts are suggested. On the whole, we provide a more robust decision theory, based on a weaker set of axioms, but embodying coherence, since it essentially implies carrying out a family of coherent decision analyses.     

Games without Rules

We introduce the notion of an outcome space, in which strategic interactions are embedded. This allows us to investigate the idea that one strategic interaction might be an expanded version of another interaction. We then characterize the Nash equilibria arising in such extensions and demonstrate a folk-type theorem stating that any individually rational element of the outcome space is a Nash equilibrium.     

Specification of objectives in decision problems

If a decision problem is said to be difficult, one usually assumes that there is a very complicated relationship between the decision and the corresponding outcome. The problem is considered as solved when this relationship has been sorted out and described. This means that the probelm of selecting the best outcome from a set of possible outcomes, is taken as trivial. The main, or only difficulty is to find the decision which will lead to the best of the possible outcomes. The author argues that the real difficulty may often be to specify a preference ordering over the set of outcomes. He illustrates the point with examples from economics, and discusses some investment problems, in which the outcome of a decision naturally can be considered as a stochastic process.     

Compatibility of multiple goal programming and the maximize expected utility criterion

Assuming a decision maker accepts the basic axioms of von Neumann-Morgenstern utility theory and is therefore an expected utility maximizer, this paper argues that the domain of the decision variables in a multiobjective program should be altered in order to guarantee that it will be compatible with the maximize expected utility critierion. Stochastic dominance is employed to approximate this new domain, and for a certain class of decision problems it is shown that this approximation is very good.     

Complementarity of behavioral biases

I investigate the complementarity of behavioral biases in a simple investment problem. The agent has incomplete knowledge about the correlation between fitness and the decision environment. Nature endows the agent with a decision procedure so that the induced action can reflect this correlation. I show that the agent with this decision procedure always exhibits (i) present biased time preference, (ii) distorted beliefs, and (iii) cognitive dissonance. The three biases are complements and the absence of one of them destroys the value of the other two. The decision procedure also provides insights into the non-fungibility of savings.