Giacomo Bonanno

The paradigm for modelling decision-making under uncertainty has undoubtedly been the theory of Expected Utility, which was first developed by von Neumann and Morgenstern (1944) and later extended by Savage (1954) to the case of subjective uncertainty. The inadequacy of the theory of Subjective Expected Utility (SEU) as a descriptive theory was soon pointed out in experiments, most famously by Allais (1953) and Ellsberg (1961). The observed departures from SEU noticed by Allais and Ellsberg became known as “paradoxes”. The Ellsberg paradox gave rise, several years later, to a new literature on decision-making under ambiguity. The theoretical side of this literature was pioneered by Schmeidler (1989). This literature views the departures from SEU in situations similar to those discussed by Ellsberg as rational responses to ambiguity. The rationality is “recovered” by relaxing Savage's Sure-Thing principle and adding an ambiguity-aversion postulate. Thus the ambiguity-aversion literature takes a normative point of view and does consider Ellsberg-type choices as behavioural “anomalies”

The contributions to the Special Issue on Multiple Belief Change, Iterated Belief Change and Preference Aggregation are divided into three parts. Four contributions are grouped under the heading "multiple belief change" (Part I, with authors M. Falappa, E. Fermé, G. Kern-Isberner, P. Peppas, M. Reis, and G. Simari), five contributions under the heading "iterated belief change" (Part II, with authors G. Bonanno, S.O. Hansson, A. Nayak, M. Orgun, R. Ramachandran, H. Rott, and E. Weydert). These papers do not only pick up the particular questions raised, but also extend and modify the framework of Alchourrón, Gärdenfors and Makinson. Part III deals with preference aggregation and consists of one contribution (by F. Herzberg and D. Eckert).

In an earlier paper [Rational choice and AGM belief revision, _Artificial Intelligence_, 2009] a correspondence was established between the set-theoretic structures of revealed-preference theory (developed in economics) and the syntactic belief revision functions of the AGM theory (developed in philosophy and computer science). In this paper we extend the re-interpretation of those structures in terms of one-shot belief revision by relating them to the trichotomous attitude towards information studied in Garapa (Rev Symb Logic, 1–21, 2020) where information may be either (1) fully accepted or (2) rejected or (3) taken seriously but not fully accepted. We begin by introducing the syntactic notion of _filtered belief revision_ and providing a characterization of it in terms of a mixture of both AGM revision and contraction. We then establish a correspondence between the proposed notion of filtered belief revision and the above-mentioned set-theoretic structures, interpreted as semantic _partial_ belief revision structures. We also provide an interpretation of the trichotomous attitude towards information in terms of the degree of implausibility of the information.

There is an ongoing debate in the philosophical literature whether the conditionals that are central to deliberation are subjunctive or indicative conditionals and, if the latter, what semantics of the indicative conditional is compatible with the role that conditionals play in deliberation. We propose a possible-world semantics where conditionals of the form “if I take action _a_ the outcome will be _x_” are interpreted as material conditionals. The proposed framework is illustrated with familiar examples and both qualitative and probabilistic beliefs are considered. Issues such as common-cause cases and ‘Egan-style’ cases are discussed.

We consider a basic logic with two primitive uni-modal operators: one for certainty and the other for plausibility. The former is assumed to be a normal operator, while the latter is merely a classical operator. We then define belief, interpreted as “maximally plausible possibility”, in terms of these two notions: the agent believes \ if she cannot rule out \ ), she judges \ to be plausible and she does not judge \ to be plausible. We consider four interaction properties between certainty and plausibility and study how these properties translate into properties of belief. We then prove that all the logics considered are minimal logics for the highlighted theorems. We also consider a number of possible interpretations of plausibility, identify the corresponding logics and show that some notions considered in the literature are special cases of our framework.

This is a two-volume set that provides an introduction to non-cooperative Game Theory. Volume 1 covers the basic concepts, while Volume 2 is devoted to advanced topics. The book is richly illustrated with approximately 400 figures. It is suitable for both self-study and as the basis for an undergraduate course in game theory as well as a first-year graduate-level class. It is written to be accessible to anybody with high-school level knowledge of mathematics. At the end of each chapter there is a collection of exercises accompanied by detailed answers. The book contains approximately 180 exercises.

This text provides an introduction to the topic of rational decision making as well as a brief overview of the most common biases in judgment and decision making. "Decision Making" is relatively short (300 pages) and richly illustrated with approximately 100 figures. It is suitable for both self-study and as the basis for an upper-division undergraduate course in judgment and decision making. The book is written to be accessible to anybody with minimum knowledge of mathematics (high-school level algebra and some elementary notions of set theory and probability, which are reviewed in the book). At the end of each chapter there is a collection of exercises that are grouped according to that chapter’s sections. Complete and detailed answers for each exercise are given in the last section of each chapter. The book contains a total of 121 fully solved exercises.

Making a prediction is essentially expressing a belief about the future. It is therefore natural to interpret later predictions as revisions of earlier ones and to investigate the notion of belief revision in this context. We study, both semantically and syntactically, the following principle of minimum revision of prediction: “as long as there are no surprises, that is, as long as what actually occurs had been predicted to occur, then everything which was predicted in the past, if still possible, should continue to be predicted, and no new predictions should be added.”

An information completion of an extensive game is obtained by extending the information partition of every player from the set of her decision nodes to the set of all nodes. The extended partition satisfies Memory of Past Knowledge (MPK) if at any node a player remembers what she knew at earlier nodes. It is shown that MPK can be satisfied in a game if and only if the game is von Neumann (vN) and satisfies memory at decision nodes (the restriction of MPK to a player's own decision nodes). A game is vN if any two decision nodes that belong to the same information set of a player have the same number of predecessors. By providing an axiom for MPK we also obtain a syntactic characterization of the said class of vN games.

The notion of Nash equilibrium in static oligopoly games is based on the assumption that each firm knows its entire demand curve (and, therefore, its entire profit function). It is much more likely, however, that firms only have some idea of the outcome of small price variations within some relatively small interval of prices. This is because firms can only learn their demand functions through price experiments and if they are risk-averse and/or have a low discount factor, they will be unwilling to engage in extensive price experiments involving large variations in price. We can therefore expect firms to experiment through small price variations and stop when they reach a price such that no small deviation..

We study belief change in the branching-time structures introduced in Bonanno (Artif Intell 171:144–160, 2007 ). First, we identify a property of branching-time frames that is equivalent (when the set of states is finite) to AGM-consistency, which is defined as follows. A frame is AGM-consistent if the partial belief revision function associated with an arbitrary state-instant pair and an arbitrary model based on that frame can be extended to a full belief revision function that satisfies the AGM postulates. Second, we provide a set of modal axioms that characterize the class of AGM-consistent frames within the modal logic introduced in Bonanno (Artif Intell 171:144–160, 2007 ). Third, we introduce a generalization of AGM belief revision functions that allows a clear statement of principles of iterated belief revision and discuss iterated revision both semantically and syntactically

Since belief revision deals with the interaction of belief and information over time, branching-time temporal logic seems a natural setting for a theory of belief change. We propose two extensions of a modal logic that, besides the next-time temporal operator, contains a belief operator and an information operator. The first logic is shown to provide an axiomatic characterization of the first six postulates of the AGM theory of belief revision, while the second, stronger, logic provides an axiomatic characterization of the full set of AGM postulates. © 2006 Elsevier B.V. All rights reserved

Adapting a definition introduced by Milgrom (1981) we say that a signal about the environment is good news relative to some initial beliefs if the posterior beliefs dominate the initial beliefs in the sense of first-order stochastic dominance (the assumption being that higher values of the parameter representing the environment mean better environments). We give an example where good news leads to the adoption of a more pessimistic course of action (we say that action a, reveals greater pessimism than action a„ if it gives higher payoff in bad environments and lower payoff in good environments). We then give sufficient conditions for a signal not to induce a more pessimistic choice of action.

Two questions are examined within a model of vertical differentiation. The first is whether cost-reducing innovations are more likely to be observed in regimes of more intense or less intense competition. Following Delbono and Denicolo (1990) and Bester and Petrakis (1993) we compare two identical industries that differ only in the regime of competition: Bertrand versus Cournot. Since Cournot competition leads to lower output and higher prices, it can be thought of as a regime of less intense competition. We find that the increase in profits associated with any given cost reduction is higher in the case of Cournot competition than in the case of Bertrand competition. Thus there are cost-reducing innovations that would be pursued under Cournot competition but not under Bertrand competition

The principle of belief persistence, or conservativity principle, states that ’\Nhen changing beliefs in response to new evidence, you should continue to believe as many of the old beliefs as possible' (Harman, 1986, p. 46). In particular, this means that if an individual gets new information, she has to accommodate it in her new belief set (the set of propositions she believes), and, if the new information is not inconsistent with the old belief set, then (1) the individual has to maintain all the beliefs she previously had and (2) the change should be minimal in the sense that every proposition in the new belief set must be deducible from the union of the old belief set and the new information (see, e.g., Gardenfors, 1988; Stalnaker, 1984). We focus on this minimal notion of belief persistence and characterize it both semantically and syntactically. A ’possible world' semantic formalization of the principle easily comes to mind. The set of all the propositions that the individual believes corresponds to the set of states of the world that she considers possible and is a subset of the set of states that are not ruled out by the individual's information (or knowledge). It is required that, if the individual considers a state possible and her new information does not exclude this state, then she continue to consider it possible. Furthermore, if the individual regards a particular state as impossible, then she should continue to regard it as impossible unless her new information excludes all the states that she previously regarded as possible. This is closely related to the..