Abstract
This article concerns the prescriptive function of decision analysis. Consider an agent whomust choose an action yieldingwelfare that varies with an unknown state of nature. It is often asserted that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. Any choice respecting weak and stochastic dominance is rational from the actualist perspective.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 195-210 |
| Number of pages | 16 |
| Journal | Theory and Decision |
| Volume | 71 |
| Issue number | 2 |
| DOIs | |
| State | Published - Aug 2011 |
Funding
Acknowledgments This research was supported in part by NSF Grant SES-0549544. This paper was first circulated in August 2008 with the title “Partial Prescriptions for Decisions with Partial Knowledge.” I have benefitted from the comments of Ken Binmore, Larry Blume, Buz Brock, Dan Hausman, Francesca Molinari, Jörg Stoye, and Alex Tetenov. I have also benefitted from the opportunity to present this work in a seminar at the University of Chicago.
Keywords
- Consequentialism
- Decisions with partial knowledge
- Prescriptive decision analysis
- Respect for dominance
ASJC Scopus subject areas
- General Decision Sciences
- Developmental and Educational Psychology
- Arts and Humanities (miscellaneous)
- General Economics, Econometrics and Finance
- Applied Psychology
- Computer Science Applications
- General Social Sciences