Lara Buchak sets out an original account of the principles that govern rational decision-making in the face of risk.
A distinctive feature of these decisions is that individuals are forced to consider how their choices will turn out under various circumstances, and decide how to trade off the possibility that a choice will turn out well against the possibility that it will turn out poorly.
The orthodox view is that there is only one acceptable way to do this:rational individuals must maximize expected utility.
Buchak's contention, however, is that the orthodox theory (expected utility theory) dictates an overly narrow way in which considerations about risk can play a role in an individual's choices.
Combining research from economics and philosophy, she arguesfor an alternative, more permissive, theory of decision-making: one that allows individuals to pay special attention to the worst-case or best-case scenario (among other 'global features' of gambles).
This theory, risk-weighted expected utility theory, better captures the preferences of actual decision-makers.
Furthermore, it isolates the distinct roles that beliefs, desires, and risk-attitudes play in decision-making.
Finally, contra the orthodox view, Buchak argues that decision-makers whosepreferences can be captured by risk-weighted expected utility theory are rational.
Thus, Risk and Rationality is in many ways a vindication of the ordinary decision-maker-particularly his or her attitude towards risk-from the point of view of even ideal rationality.
- Format: Hardback
- Pages: 274 pages
- Publisher: Oxford University Press
- Publication Date: 07/11/2013
- Category: Decision theory: general
- ISBN: 9780199672165
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