Decision Theory and Rationality
The concept of rationality is a common thread through the human and social sciences — from political science to philosophy, from economics to sociology, and from management science to decision analysis. But what counts as rational action and rational behavior? José Luis Bermúdez explores decision theory as a theory of rationality. Decision theory is the mathematical theory of choice and for many social scientists it makes the concept of rationality mathematically tractable and scientifically legitimate. Yet rationality is a concept with several dimensions and the theory of rationality has different roles to play. It plays an action-guiding role (prescribing what counts as a rational solution of a given decision problem). It plays a normative role (giving us the tools to pass judgment not just on how a decision problem was solved, but also on how it was set up in the first place). And it plays a predictive/explanatory role (telling us how rational agents will behave, or why they did what they did). This controversial but accessible book shows that decision theory cannot play all of these roles simultaneously. And yet, it argues, no theory of rationality can play one role without playing the other two. The conclusion is that there is no hope of taking decision theory as a theory of rationality.
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action-guiding dimension agent prefers agent’s Allais Allais paradox assumption axiomatic basic behavior beliefs and desires breaches Broome Broome’s cardinal utilities challenges choice node choose co-reportive compound lottery concept of rationality conditional desirabilities consequentialist considered preference consistency decision problem dimensions of rationality example expected utility principle expected utility theory explanation and prediction expressed preferences extensionality gamble individuating outcomes invariance principle irrational John Broome material equivalence maximizing expected utility McClennen normative assessment dimension normative force one’s operational interpretation optimal foraging theory option perspective pizza possible outcomes pragmatic argument precommitment Pref preference change preference reversal probability and utility probability distribution propositions prospect theory psychological explanation rational preference reasons relevant representation theorems requirements resolute choice revealed preference Schick second-order preference sense separability principle sequential choice sequential inconsistency sophisticated chooser substitution axiom taking decision theory theorists theory of deliberation theory of rationality understanding utility and probability utility function