CONSEQUENTIALISM AND RATIONAL CHOICE: LESSONS FROM THE ALLAIS PARADOX

Abstract: This paper investigates the relation between consequentialism, as conceived of in moral theory, and standard expected utility theory. I argue that there is a close connection between the two. I show furthermore that consequentialism is not neutral with regard to the values of the agent. Consequentialism, as well as standard expected utility theory, is incompatible with the recognition of considerations that depend on what could have been the case, such as regret and disappointment. I conclude that consequentialism should be rejected as a principle of rational choice and that there are reasons to doubt its plausibility in the realm of moral theory. Moreover, this is a reason to doubt whether standard expected utility theory is a plausible theory of rational choice.     

Utility Monsters for the Fission Age

One of the standard approaches to the metaphysics of personal identity has some counter‐intuitive ethical consequences when combined with maximising consequentialism and a plausible (though not uncontroversial) doctrine about aggregation of consequences. This metaphysical doctrine is the so‐called ‘multiple occupancy’ approach to puzzles about fission and fusion. It gives rise to a new version of the ‘utility monster’ problem, particularly difficult problems about infinite utility, and a new version of a Parfit‐style ‘repugnant conclusion’. While the article focuses on maximising consequentialism for simplicity, the problems demonstrated apply more widely to a range of ethical views, especially flavours of consequentialism. This article demonstrates how these problems arise, and discusses a number of options available in the light of these problems for a consequentialist tempted by a multiple occupancy metaphysics.     

Decomposition of multivariate utility functions in non-additive expected utility theory

In expected utility many results have been derived that give necessary and/or sufficient conditions for a multivariate utility function to be decomposable into lower-dimensional functions. In particular, multilinear, multiplicative and additive decompositions have been widely discussed. These utility functions can be more easily assessed in practical situations. In this paper we present a theory of decomposition in the context of nonadditive expected utility such as anticipated utility or Choquet expected utility. We show that many of the results used in conventional expected utility carry over to these more general frameworks. If preferences over lotteries depend only on the marginal probability distributions, then in expected utility the utility function is additively decomposable. We show that in anticipated utility the marginality condition implies not only that the utility function is additively decomposable but also that the distortion function is the identity function. We further demonstrate that a decision maker who is bivariate risk neutral has a utility function that is additively decomposable and a distortion function q for which q(½) = ½.     

Rationality,group choice and expected utility

In this paper I propose a view uniformly extending expected utility calculations to both individual and group choice contexts. By way of three related cases I discuss the problems inherent in applying expected utility to group choice cases. I show that the problem with such group cases does not essentially depend upon the fact that more than one agent is involved. A modified strategy is then devised allowing the application of the expected utility formula to these otherwise problematic cases. One case, however, leads to contradiction. But recognizing the falsity of the proposition.(1) If an agent x knows options A and B are both available, and x knows that were he to do A he would be better off (in every respect) than were he to do B, then doing A is more rational for x than doing B,allows the resolution of the contradiction and also allows my modified strategy to resolve otherwise paradoxical cases of group choice such as the Prisoners' Dilemma.This paper is dedicated to my parents, Arleen Eichengreen and Alvin Richter, for their encouragement, understanding, and financial support. Very special thanks also go to Daniel Hunter, Richard Sharvy, and Paul Horwich. In addition I owe a great deal to discussions and correspondence with Michael Ferejohn, John Ferejohn, Kit Fine, Allan Gibbard, Dale Jamieson, Gregory Kavka, David Lewis, J. Karel Lambert, Alice Perrin, Howard Pospesel, Brian Skyrms, J. Howard Sobel, and Michael Tooley.     

Subjective utility,anticipated utility,and the Allais paradox

One of the most notable counterexamples to expected utility theory is the “Allais paradox” (M. Allais, 1953, Econometrica, 31, 503–546). A number of alternative theories have been proposed in an attempt to resolve this paradox, notably including Karmarkar, 1978, Karmarkar, 1979, 24, 67–72). It is shown that SWU theory necessarily involves violations of dominance, but that the theory can be modified to avoid these violations. The result is a special case of J. Quiggin's anticipated utility theory (1982, Journal of Economic Behaviour and Organisation, 3, 323–343).     

Subjective expected utility without preferences

This paper proposes a theory of subjective expected utility based on primitives only involving the fact that an act can be judged either “attractive” or “unattractive”. We give conditions implying that there are a utility function on the set of consequences and a probability distribution on the set of states such that attractive acts have a subjective expected utility above some threshold. The numerical representation that is obtained has strong uniqueness properties.     

A simple model for the utility of gambling

A model of the utility of gambling is presented in a modified von Neumann-Morgenstern format. Axioms imply a utility function that preserves preferences between sure things and between gambles. The addition of a utility of gambling term to the expected utility of a gamble preserves preference comparisons between gambles and sure things. Aspects of the utility of gambling are noted, and comparisons are made to standard concepts of risk attitudes.The author is indebted to Joseph Sani for valuable discussions on the topic of this paper.     

Reference-dependent expected utility with incomplete preferences

An important reason why people deviate from expected utility is reference-dependence of preferences, implying loss aversion. Bleichrodt [Bleichrodt H. (2007). Reference-dependent utility with shifting reference points and incomplete preferences. Journal of Mathematical Psychology, 51, 266-276] argued that in the empirically realistic case where the reference point is always an element of the decision maker’s opportunity set, reference-dependent preferences have to be taken as incomplete. This incompleteness is a consequence of reference-dependence and is different in nature from the type of incompleteness usually considered in the literature. It cannot be handled by existing characterizations of reference-dependence, which all assume complete preferences. This paper presents new preference foundations that extend reference-dependent expected utility to cover this case of incompleteness caused by reference-dependence. The paper uses intuitive axioms that are easy to test. Two special cases of reference-dependent expected utility are also characterized: one model in which utility is decomposed into a normative and a psychological component and one model in which loss aversion is constant. The latter model has been frequently used in empirical research on reference-dependence.     

Expected utility and constrained maximization: Problems of compatibility

In recent attempts at deriving morality from rationality expected utility theory has played a major role. In the most prominent such attempt, Gauthier'sMorals by Agreement, a mode of maximizing utility calledconstrained maximization is defended. I want to show that constrained maximization or any similar proposal cannot be coherently supported by expected utility theory. First, I point to an important implication of that theory. Second, I discuss the question of what the place of constrained maximization in utility theory might be. Third, I argue that no matter how we answer this question, expected utility theory cannot provide the reason why a moral disposition like constrained maximization is to be preferred to its rivals.     

Axiomatic justifications of the utility principle: A formal investigation

It is argued that existing axiomatic theories of utility do not provide the utility principle or the principle of maximising expected utility with a formal justification. It is also argued that these theories only put mild constraints on a decision-maker in a decision-context. Finally, it is argued that the prospects are not particularly bright for finding formal non-circular arguments for the utility principle that do not rely on the law of large numbers.     

对以边沁、密尔为代表的功利主义的分析批判

边沁的功利主义为苦乐原理、效果论和功利原则这样三个理论基点所构成。这是一个有着内在逻辑困境的三原理。苦乐原理由于没有进行内在的质的区分,为密尔所修正,但密尔的修正突出了苦乐原理与效果论的内在不一致;同时,密尔以自我牺牲来补充功利主义,又暴露了功利主义原则的内在矛盾。还有,密尔以平等权利来为功利主义的最大幸福原理辩护,恰恰表明功利原则并非是可以成为一个理论的基础性原则或终极原则。斯马特的行动功利主义则进一步暴露了功利主义的非正义性特性。功利主义的这样三个典范表明仅仅诉诸功利原则无从走出内在逻辑困境。布兰特援引认知理论以及道义论原则,笔认为这才使功利主义从其困境中走出。     

INDIRECT CONSEQUENTIALISM,SUBOPTIMALITY, AND FRIENDSHIP1

Abstract: Critics have persistently charged that indirect consequentialism, despite the best efforts of its defenders, ultimately fails to appropriately account for friendship in the face of the alienation generated by the harsh demands of consequentialism. Robert F. Card has recently alleged that the dispositional emphasis of indirect consequentialism renders its defender incapable of rejecting problematic friendships that are seriously suboptimal. I argue that Card's criticism not only fails to undermine indirect consequentialism, but in fact provides considerations that both help us to better understand the theory and ultimately weigh in favor of it over Card's own brand of sophisticated consequentialism.     

CONSEQUENTIALISM, TELEOLOGY, AND THE NEW FRIENDSHIP CRITIQUE1

Abstract: A powerful objection to impersonal moral theories states that they cannot accommodate the good of friendship. This paper focuses on the problem as it applies to consequentialism and addresses the recent criticism that even the most sophisticated forms of consequentialism are incompatible with genuine friendship. I argue that this objection fails since those who pose this challenge either seriously oversimplify consequentialism's theory of value, misunderstand its theory of practical reason, or put too much weight on the good of friendship itself. I conclude by assessing a contemporary consequentialist response in order to suggest a workable conception of consequentialist friendship.     

REPLY TO JULIA DRIVER,TIMM TRIPLETT,AND KATHLEEN WALLACE

Abstract: Julia Driver, Timm Triplett, and Kathleen Wallace challenge my account of moral arrogance, and Triplett and Wallace challenge its application to the problem of abortion. I try to show here that Driver's attempt to defend consequentialism from my charge that it promotes moral arrogance is successful only if consequentialism explicitly gives up what has been considered one of its major virtues. I acknowledge that Triplett has uncovered some unclarity in my claim that the moral acceptability of abortion is an unresolvable moral issue. I also acknowledge that Wallace has uncovered some unclarity in my account of moral arrogance. After clarifying that account, I try to meet her challenge to defend my claim that it is not morally arrogant for a state to place some restrictions on abortions.     

MONKEYS, TYPEWRITERS, AND OBJECTIVE CONSEQUENTIALISM

There have been several recent attempts to refute objective consequentialism on the grounds that it implies the absurd conclusion that even the best of us act wrongly. Some have argued that we act wrongly from time to time; others have argued that we act wrongly regularly. Here I seek to strengthen reductio arguments against objective consequentialism by showing that objective consequentialism implies that we almost never act rightly. I show that no matter what you do, there is almost certainly something else you could do that would have even better consequences. If objective consequentialism is true, the ratio of the number of your right actions to the number of your wrong actions is very close to zero.     

Robustness of expected utility model in predicting individual choices

In this paper we show how utility, lottery dependent utility, and weighted utility models can be calibrated using algebraic and statistical techniques. The models are empirically compared in laboratory (student subjects) and real settings (sales force personnel of the Los Angeles Times). In our empirical comparison we evaluate two aspects: the extent to which observed preferences are consistent with each model, and predictive accuracy of the models on a holdout sample. The results indicate that only about 20% of the observed choice patterns in our experimental design are consistent with the expected utility model, 50% with the weighted utility model, and 90% with the general lottery dependent utility model. On individual level predictions to the holdout sample, however, the expected utility model does as well as the other two models. This latter finding is robust across different measurement and estimation methods and student and non-student subjects.     

The linear utility model for optimal selection

A linear utility model is introduced for optimal selection when several subpopulations of applicants are to be distinguished. Using this model, procedures are described for obtaining optimal cutting scores in subpopulations in quota-free as well as quota-restricted selection situations. The cutting scores are optimal in the sense that they maximize the overall expected utility of the selection process. The procedures are demonstrated with empirical data.     

Additivity and expected utility in risky multiattribute preferences

This experiment analyzed human preferences among even chance gambles for commodity bundles. The purpose of the experiment was to test several independence assumptions that distinguish between models for risky multiattribute preferences. In particular, the additivity and the expected utility part of the additive expected utility model were tested symmetrically. The degree and form of model violations were established, and the effects of instructions and of response modes were examined. All independence assumptions were violated by a bias to prefer a gamble or a commodity bundle that was previously matched against a standard. Systematic and strong violations that superseded this bias questioned the validity of the additive expected utility model. In violation of the additivity part of that model subjects consistently preferred the gamble with more balanced outcomes when comparing gambles with identical marginal probability distributions. This trend, called multiattribute risk aversion, was independent of subjects' single attribute risk attitude. Instructions and response modes had no noticeable impacts on these response patterns.     

On between-subjects versus within-subjects comparisons in testing utility theory

Empirical studies of expected utility theory often employ a between-subjects design. This practice has been recently criticized by J. C. Hershey and P. J. H. Schoemaker (1980, Organizational Behavior and Human Performance, 25, 395–418). The present paper provides a critical analysis of the controversial issues concerning the use of between-subjects vs within-subjects comparisons. It is claimed that the choice of experimental design should be determined, among other things, by theoretical aspects (e.g., the interpretation of utility theory) and the nature of the scientific problem. Following, we present relevant psychological considerations and conclude that, in the context of testing utility theory, a between-subjects design will often be more desirable. We then describe three different hypotheses that a researcher may be interested in testing, and identify the appropriate design for testing each of these hypotheses. The relationships between the different hypotheses are discussed. We apply our framework to reanalyze the reflection effect and compare it with the analysis proposed by Hershey and Schoemaker (1980). Methodological implications for future research are briefly discussed.