Bayesian decision theory,rule utilitarianism,and Arrow's impossibility theorem

The first part of this paper reexamines the logical foundations of Bayesian decision theory and argues that the Bayesian criterion of expected-utility maximization is the only decision criterion consistent with rationality. On the other hand, the Bayesian criterion, together with the Pareto optimality requirement, inescapably entails a utilitarian theory of morality. The next sections discuss the role both of cardinal utility and of cardinal interpersonal comparisons of utility in ethics. It is shown that the utilitarian welfare function satisfies all of Arrow's social choice postulates avoiding the celebrated impossibility theorem by making use of information which is unavailable in Arrow's original framework. Finally, rule utilitarianism is contrasted with act utilitarianism and judged to be preferable for the purposes of ethical theory.     

Church Attendance,Social Capital,and Black Voting Participation*

Objectives. We test the traditional studies of political participation that suggest enhanced education and income will help reduce the racial gap in voting. Methods. We adopt a Bayesian model to test the impact of education and income on both black and white racial groups. We also link the explanation of black voting participation to social capital. Results. We find that bonding and bridging social capital as well as human capital are all important in explaining white voting participation, but only bonding social capital, measured by church attendance, explained African‐American voting participation. Conclusions. We conclude that the utility of social capital theory and continuing significance of human capital theory must be considered in a racial context. In addition, our findings offer important implications about the continuing role of black churches for increasing social capital and political participation.     

Norms and rationality. Is moral behavior a form of rational action?

This article addresses major arguments in the controversy about the “rationality” of moral behavior: can moral behavior be explained by rational choice theory (RCT)? The two positions discussed are the incentives thesis (norms are incentives as any other costs and benefits) and the autonomy thesis claiming that moral behavior has nothing to do with utility. The article analyses arguments for the autonomy thesis by J. Elster, A. Etzioni, and J. G. March and J. P. Olsen. Finally, the general claim is discussed whether norm following and norm emergence are utility maximizing. The conclusion is that the autonomy thesis is not tenable if one applies a wide subjectivist, social psychological version of RCT that includes the assumption of “bounded rationality.” The autonomy thesis is only compatible with a narrow version of RCT that excludes internal outcomes and that refers to norms that do not have external outcomes. It is argued that such a narrow version is not capable of explaining many forms of behavior social scientists are interested in.     

Rawls and Bentham reconciled

The paper deals with the characterization of a class of social welfare orderings. The social evaluation functions which represent these orderings are separable in the components of the ordered utility vector. The characterization is based on the Strong Pareto Property, Co-cardinality, Continuity and a new Independence Property. Since this class encompasses the utilitarian rule and since there are members of this family which almost coincide with the rules of rank dictatorship this family bridges the gap between pure utilitarianism and rank dictatorship.     

Uncertainty in moral theory: An epistemic defense of rule-utilitarian liberties

The purpose of this essay is to defend utilitarianism from the popular objection that it makes moral theory depend improperly upon uncertain factual information and calculations which may produce violations of individual rights or liberties. This objection is a more subtle variant of the general Kantian complaint that utilitarianism makes morality improperly contingent upon empirical facts about historical, socioeconomic circumstances, the consequences of actions, institutions, etc., thereby allowing individual liberties to be sacrificed in order to maximize the collective welfare. Three main arguments connected with the uncertainty-objection are delineated in Rawls' work, and are seen to be fallacious. It is concluded that a suitably sophisticated form of rule-utilitarianism need not base liberty on any impermissible kind of uncertainty in moral theory. This analysis is contrary not only to what Rawlsians and other Kantians nowadays typically argue or assume in criticizing utilitarianism, but also to what some of the leading critics of Rawls have said about his anti-utilitarian stance.     

On risk aversion,classical demand theory,and KM preferences

Building on Kihlstrom and Mirman (Journal of Economic Theory, 8(3), 361–388, 1974)’s formulation of risk aversion in the case of multidimensional utility functions, we study the effect of risk aversion on optimal behavior in a general consumer’s maximization problem under uncertainty. We completely characterize the relationship between changes in risk aversion and classical demand theory. We show that the effect of risk aversion on optimal behavior depends on the income and substitution effects. Moreover, the effect of risk aversion is determined not by the riskiness of the risky good, but rather the riskiness of the utility gamble associated with each decision.     

Harsanyi’s critical rule utilitarianism

In his recent book,Rational Behaviour and Bargaining Equilibrium In Games and Social Situations, John C. Harsanyi devotes a chapter to his new theory of morality, which he calls ‘Critical Rule Utilitarianism’, and which contains his solution to the problem of the interpersonal comparison of utility. After a detailed exposition of his theory, arguments will be presented to show that:

1. there are certain formal difficulties in the solution that he offers which leads to a rejection of the axiom that there is to be agreement between an individualj’s personal preferences and individuali’s (i ≠j) extended utility function out of which the social welfare function is to be constructed; and
2. Harsanyi’s theory of critical rule utilitarianism cannot be accepted as a theory of morality because it presupposes a more fundamental theory in its actual construction.

     

Is the Disposition of Constrained Maximization Chosen Rationally?

One of the most important issues in moral philosophy is whether morality can be justified by rationality. The purpose of this study is to examine Gauthier’s moral theory, focusing on the disposition of constrained maximization, which is the main thrust of his project to justify morality rationally. First of all, I shall investigate Gauthier’s assumption and condition for the rationality of the disposition of constrained maximization so as to disclose that the disposition of constrained maximization is not necessarily chosen by rational agents. Then I shall explore his other arguments including ones for the reinterpretation of rationality and the self-critical reflection of rational beings, which can be considered as his further efforts to make the disposition of constrained maximization a rational choice. By exploring them, I shall attempt to indicate that those arguments are not valid so long as he clings to the maximizing conception of rationality and thereby this conception of rationality itself is not enough to provide morality with a basis.     

The utilitarian contract: A generalization of Rawls' theory of justice

In a series of major papers culminating in A Theory of Justice, John Rawls constructs an alternative to utilitarianism by developing a social contract theory of moral and political philosophy. Unfortunately, Rawls formulates the two basic principles upon which the theory rests in such a way as to restrict (unduly) the contract theory's applicability (see Section I). In this paper we present a more general discussion of the theory of justice that avoids the problems of Rawls' formulation and yet retains the important idea of justice as fairness and the contractarian approach (Section II). Later it is argued that this more general theory constitutes a bridge between the pure utilitarian theories and the social contract doctrines (Sections V and VI). The theory's advantages are demonstrated by applying it to a problem discussed by Rawls, intergenerational equity, and comparing the two solutions (Section III). Further comparisons are made and inferences drawn in the concluding three sections.Without implicating them, we would like to thank James M. Buchanan and David Lyons for comments on an earlier draft of this paper.

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Optimal inequality behind the veil of ignorance

In Rawls’ (A theory of justice. Harvard University Press, Cambridge, 1971) influential social contract approach to distributive justice, the fair income distribution is the one that an individual would choose behind a veil of ignorance. Harsanyi (J Polit Econ 61:434–435, 1953, J Polit Econ 63:309–332, 1955, Am Polit Sci Rev 69:594–606, 1975) treated this situation as a decision under risk and arrived at utilitarianism using expected utility theory. This paper investigates the implications of applying cumulative prospect theory instead, which better describes behavior under risk. I find that the specific type of inequality in bottom-heavy right-skewed income distributions, which includes the log-normal income distribution, could be perceived as desirable. This optimal inequality result contrasts the implications of other social welfare criteria.     

An axiomatic derivation of subjective probability,utility, and evaluation functions

Subjective expected utility maximization is derived from four axioms, using an argument based on the separating hyperplane theorem. It is also shown that the first three of these axioms imply a more general maximization formula, involving an evaluation function, which can still serve as a basis for decision analysis.     

Embedded choices

In this article, we present a contextually embedded choice theory. Using concepts and tools of poset mathematics, we show how to include in rational choice theory cultural and social effects. Specifically, we define some choice superstructures, seen as choice set transformations imposed by cultural and social norms. As we shall argue, these transformations can be of help to explain choice behavior within different contexts. Moreover, we show that, once choice superstructures are taken into account, some well-known results about maximizing and optimizing behavior are easily confirmed and some insights on intransitive choices may be phased out.     

On the possibility of rational policy evaluation

Arrow proved the inconsistency of a set of reasonable looking conditions on a social decision rule. These conditions are stated and their rationale explained. It is argued that the blame for the inconsistency must lie with Arrow's Collective Rationality condition. Arrow's abstract problem is generalized and interpreted in terms of individual as well as collective decision-making. His conditions are revised so that (1) cardinal - even interpersonal - utility comparisons are allowed and (2) the Collective Rationality condition - which formulates the traditional conception of rational choice as maximizing choice - is weakened to its bare bones. The revised set of conditions is still inconsistent. Once again the culprit is the Collective Rationality condition, now drastically weakened: even the bare bones of Arrow's conception of rational choice as maximizing choice is untenable. An alternative conception is proposed.     

A Method for Eliciting Utilities and its Application to Collective Choice

Designing a mechanism that provides a direct incentive for an individual to report her utility function over several alternatives is a difficult task. A framework for such mechanism design is the following: an individual (a decision maker) is faced with an optimization problem (e.g., maximization of expected utility), and a mechanism designer observes the decision maker’s action. The mechanism does reveal the individual’s utility truthfully if the mechanism designer, having observed the decision maker’s action, infers the decision maker’s utilities over several alternatives. This paper studies an example of such a mechanism and discusses its application to the problem of optimal social choice. Under certain simplifying assumptions about individuals’ utility functions and about how voters choose their voting strategies, this mechanism selects the alternative that maximizes Harsanyi’s social utility function and is Pareto-efficient.     

Dworkin's moral hermeneutics and sociological theory

As a leading contemporary legal theorist, Ronald Dworkin has been consequential and provocative with respect to the development of jurisprudence. This study selectively applies the general principles of Dworkin's work first to Max Weber's argument for the use of ideal types in the theory construction of social inquiry and then to Talcott Parsons's critique of utilitarianism as a viable theory of social action. The aim is to invigorate, from the vantage point of an interdisciplinary perspective, our understanding of the moral origins of sociological theory.     

What Makes a Good Decision? Robust Satisficing as a Normative Standard of Rational Decision Making

Most decisions in life involve ambiguity, where probabilities can not be meaningfully specified, as much as they involve probabilistic uncertainty. In such conditions, the aspiration to utility maximization may be self‐deceptive. We propose “robust satisficing” as an alternative to utility maximizing as the normative standard for rational decision making in such circumstances. Instead of seeking to maximize the expected value, or utility, of a decision outcome, robust satisficing aims to maximize the robustness to uncertainty of a satisfactory outcome. That is, robust satisficing asks, “what is a ‘good enough’ outcome,” and then seeks the option that will produce such an outcome under the widest set of circumstances. We explore the conditions under which robust satisficing is a more appropriate norm for decision making than utility maximizing.     

公民意识培育的当代价值及路径

公民意识是个体对自己在国家政治生活和社会生活中的主体地位以及法定权利和法定义务的自觉意识,包括主体意识、权利意识、责任意识、参与意识、民主法治意识等。积极培育公民意识是中国实现现代化强国的关键,中华民族实现伟大复兴的理性选择。因此,加强科学发展观教育、社会主义核心价值体系教育、公德意识教育和社会主义法制教育是当前公民意识培育的重大而紧迫的任务。     

Strict proportional power in voting bodies

It is a widely known fact among game theorists as well as political scientists that the distribution of voting weights in a voting body is generally a poor proxy for the distribution of voting power within the body. It has been proposed to equate the distribution of a priori voting power and actual seat distribution by randomizing the decision rule of the voting body over various majority rules. In this paper, some implications of this procedure will be discussed.     

Do financial professionals behave according to prospect theory? An experimental study

Prospect theory is increasingly used to explain deviations from the traditional paradigm of rational agents. Empirical support for prospect theory comes mainly from laboratory experiments using student samples. It is obviously important to know whether and to what extent this support generalizes to more naturally occurring circumstances. This article explores this question and measures prospect theory for a sample of private bankers and fund managers. We obtained clear support for prospect theory. Our financial professionals behaved according to prospect theory and violated expected utility maximization. They were risk averse for gains and risk seeking for losses and their utility was concave for gains and (slightly) convex for losses. They were also averse to losses, but less so than commonly observed in laboratory studies and assumed in behavioral finance. A substantial minority focused on gains and largely ignored losses, behavior reminiscent of what caused the current financial crisis.