Abstract
In an essay on risk perception, Kenneth Arrow writes: “The concept of rationality has been basic to most economic analysis.”1 Arrow has a specific conception of rationality in mind, a major implication of which is the expected utility hypothesis. This hypothesis says that a rational individual assesses alternative choices in terms of expected utility — the aggregated, probability-weighted utilities of each alternative’s possible consequences — and then chooses the alternative that maximizes this amount.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Kenneth Arrow, “Risk Perception in Psychology and Economics,” Economic Inquiry 20 (1982), p. 1.
James March, “Bounded Rationality, Ambiguity, and the Engineering of Choice,” The Bell Journal of Economics 9 (1978), p. 588.
For a description of these violations, see Amos Tversky and Daniel Kahneman, “The Framing of Decisions and the Psychology of Choice,” Science 211 (January 30, 1981), pp. 453–58; also, Kahneman and Tversky, “The Psychology of Preferences,” Scientific American 246 (January 1982), pp. 160–71.
Paul Slovic and Amos Tversky, “Who Accepts Savage’s Axioms?” Behavioral Science 19 (1974), pp. 363–73; and K. R. MacCrimmon and S. Larsson, “Utility Theory: Axioms versus ‘Paradoxes’,” Expected Utility Hypotheses and the Allais Paradox, ed. M. Allais and O. Hagen ( Dodrecht: Reidel, 1979 ), pp. 333–409.
Paul Samuelson, “Probability and the Attempts to Measure Utility,” The Economic Review 1 (1950), p. 167
Daniel Kahneman and Amos Tversky, “Prospect Theory,” Econometrica 47 (1979), pp. 263–91.
Mary Douglas, “Cultural Bias,” in In the Active Voice (London: Routledge and Kegan Paul, 1982); and Michael Thompson, “An Outline of the Cultural Theory of Risk,” IIASA Working Paper WP-80–177 ( Laxenburg, Austria, 1980 ).
See Charles Taylor, “The Diversity of Goods,” in Utilitarianism and Beyond, ed. A. Sen and B. Williams (Cambridge: Cambridge University Press, 1982), pp. 129–44; Stuart Hampshire, Morality and Conflict (Cambridge, Massachusetts: Harvard University Press, 1984); and Ian Hacking, “Hume’s Species of Probability,” Philosophical Studies 33 (1978), pp. 21–37.
Maurice Allais, “Le Comportement de l’Homme Rationnel devant le Risque: Critique des Postulates et Axiommes de l’Ecole Americaine,” Econometrica 21 (1953), pp. 503–46.
I first encountered this version in David Lewis, “Russian Roulette,” (1984), unpublished mimeo. He attributes it to Allan Gibbard.
Howard Raiffa, Decision Analysis (Reading, Massachusetts: Addison-Wesley, 1968), pp. 80–86. Lewis, “Russian Roulette.”
Tversky and Kahneman, “The Framing of Decisions and the Psychology of Choice,” p. 458.
Thomas Nagel, “The Limits of Objectivity,” The Tanner Lectures on Human Values, Volume 1, ed. S. McMurrin ( Salt Lake City: University of Utah Press, 1980 ), pp. 134–35.
Arrow, “Risk Perception in Psychology and Economics,” p. 6.
Ibid.
Kahneman and Tversky, “The Framing of Decisions and the Psychology of Choice,” p. 453.
See, for example, David Bell, “Regret in Decision Making Under Uncertainty,” Operations Research 30 (1982), pp. 961–81; Peter Fishburn, “Normative Theories of Rationality Under Risk and Under Uncertainty,” Bell Laboratories, June 1983; and Mark Machina, “’Expected Utility’ Analysis Without the Independence Axiom,” Econometrica 50 (1981), pp. 297–323.
Bell, “Regret in Decision Making Under Uncertainty,” p. 962.
Author information
Authors and Affiliations
Editor information
Rights and permissions
Copyright information
© 1985 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Maclean, D. (1985). Rationality and Equivalent Redescriptions. In: Grauer, M., Thompson, M., Wierzbicki, A.P. (eds) Plural Rationality and Interactive Decision Processes. Lecture Notes in Economics and Mathematical Systems, vol 248. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-02432-4_7
Download citation
DOI: https://doi.org/10.1007/978-3-662-02432-4_7
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-15675-8
Online ISBN: 978-3-662-02432-4
eBook Packages: Springer Book Archive