Paul Weirich

The expected utility of an option for a decision maker is defined with respect to probability and utility functions that represent the decision maker’s beliefs and desires. Therefore, as the decision maker’s beliefs and desires change, the expected utility of an opinion may change. Some options are such that their realizations change beliefs and desires in ways that change the expected utilities of the options. If a decision is made among options that include one or more of these special options, I call it a decision made in a dynamic setting.The rule to maximize expected utility, MEU, is insufficient for decisions in dynamic settings. It does not say how to take account of information about the way in which the realization of an option would change the expected utility of the option.

Does rational bargaining yield a social contract that is efficient and so inclusive? A core allocation, that is, an allocation that gives each coalition at least as much as it can get on its own, is efficient. However, some coalitional games lack a core allocation, so rationality does not require one in those games. Does rationality therefore permit exclusion from the social contract? I replace realization of a core allocation with another type of equilibrium achievable in every coalitional game. Fully rational agents coordinate the pursuit of incentives so that equilibria of this type are efficient. They adopt a social contract that is efficient and inclusive

An agent often does not have precise probabilities or utilities to guide resolution of a decision problem. I advance a principle of rationality for making decisions in such cases. To begin, I represent the doxastic and conative state of an agent with a set of pairs of a probability assignment and a utility assignment. Then I support a decision principle that allows any act that maximizes expected utility according to some pair of assignments in the set. Assuming that computation of an option's expected utility uses comprehensive possible outcomes that include the option's risk, no consideration supports a stricter requirement.

A philosophical account of risk, such as this book provides, states what risk is, which attitudes to it are rational, and which acts affecting risks are rational. Attention to the nature of risk reveals two types of risk, first, a chance of a bad event, and, second, an act’s risk in the sense of the volatility of its possible outcomes. The distinction is normatively significant because different general principles of rationality govern attitudes to these two types of risk. Rationality strictly regulates attitudes to the chance of a bad event and is more permissive about attitudes to an act’s risk. Principles of rationality governing attitudes to risk also justify evaluating an act according to its expected utility given that the act’s risk, if any, belongs to every possible outcome of the act. For a rational ideal agent, the expected utilities of the acts available in a decision problem explain the agent’s preferences among the acts. Maximizing expected utility is just following preferences among the acts. This view takes an act’s expected utility, not just as a feature of a representation of preferences among acts, but also as a factor in the explanation of preferences among acts. The view extends to evaluations of combination of acts, either simultaneous or in a sequence. It takes account of an agent’s attitudes to an act’s risk without weakening the standard of expected-utility maximization. The book’s theory of risk also grounds a justification of the risk-return evaluation of investments that finance advances, and a generalized version of this type of evaluation that a professional may use to advise clients about risks and that a government regulatory agency may use to make decisions about risks on behalf of the public.

Margaret Gilbert (1990) argues that although the rationality of the agents in a standard coordination problem does not suffice for their coordination, a social convention of coordination, understood as the agents’ joint acceptance of a principle requiring their coordination, does the job. Gilbert’s argument targets agents rational in the game-theoretic sense, which following Sobel (1994: Chap. 14), I call hyperrational agents. I agree that hyperrational agents may fail to coordinate in some cases despite the obvious benefits of coordination. However, I add that fully rational agents, who rationally exercise rationality’s permissions, may coordinate in these cases without jointly accepting a principle of coordination. I make this point using a model that adopts common simplifying assumptions about agents and their coordination problems.

A common type of change in science occurs as theorists generalize a model of a phenomenon by removing some idealizations of the model. This type of change occurs in the decision sciences and also in the normative branch of the decision sciences that treats rational choice. After presenting a general ac-count of model generalization, the paper illustrates generalization of models in normative decision theory. The principal illustration generalizes a standard model of rational choice by removing the idealization that deliberation has no cost.

Expected-utility theory advances representation theorems that do not take the risk an act generates as a consequence of the act. However, a principle of expected-utility maximization that explains the rationality of preferences among acts must, for normative accuracy, take the act’s risk as a consequence of the act if the agent cares about the risk. I defend this conclusion against the charge that taking an act’s consequences to comprehend all the agent cares about trivializes the principle of expected-utility maximization.

Classical bargaining theory attempts to solve a bargaining problem using only the information about the problem contained in the representation of its possible outcomes in utility space. However, this information usually underdetermines the solution. I use additional information about interpersonal comparisons of utility and bargaining power. The solution is then the outcome that maximizes the sum of power-weighted utilities. I use these results to advance a contractarian argument for a utilitarian form of social cooperation. As the original position, I propose a hypothetical situation in which the members of society are rational, fully informed, free, and equal. I argue that in this original position they would adopt a utilitarian form of social cooperation. I conclude that utilitarian cooperation constitutes a moral ideal toward which society ought to aspire.

The rule to maximize expected utility is intended for decisions where options involve risk. In those decisions the decision maker's attitude toward risk is important, and the rule ought to take it into account. Allais's and Ellsberg's paradoxes, however, suggest that the rule ignores attitudes toward risk. This suggestion is supported by recent psychological studies of decisions. These studies present a great variety of cases where apparently rational people violate the rule because of aversion or attraction to risk. Here I attempt to resolve the issue concerning expected utility and risk. I distinguish two versions of the rule to maximize expected utility. One adopts a broad interpretation of the consequences of an option and has great intuitive appeal. The other adopts a narrow interpretation of the consequences of an option and seems to have certain technical and practical advantages. I contend that the version of the rule that interprets consequences narrowly does indeed neglect attitudes toward risk. That version of the rule excludes the risk involved in an option from the consequences of the option and, contrary to what is usually claimed, cannot make up for this exclusion through adjustments in probability and utility assignments. I construct a new, general argument that establishes this in a rigorous way. On the other hand, I contend that the version of the rule that interprets consequences broadly takes account of attitudes toward risk by counting the risk involved in an option among the consequences of the option. I rebut some objections to this version of the rules, in particular, the objection that the rule lacks practical interest. Drawing upon the literature on 'mean-risk' decision rules, I show that this version of the rule can be used to solve some realistic decision problems.

Agents face serious obstacles to making optimal decisions. For instance, their cognitive limits stand in the way. John Pollock’s book, Thinking about Acting , suggests many ways of revising decision principles to accommodate human limits and to direct limited, artificial agents. The book’s main proposal is to replace optimization, or expected-utility maximization, with locally global planning. This essay describes optimization and locally global planning, and then argues that optimization among salient options has the virtues of locally global planning without certain drawbacks. Although it does not endorse locally global planning, it recommends that decision theory incorporate some of the book’s ideas about settling for improvements when optimization among all options is unrealistic.

Groups of people perform acts that are subject to standards of rationality. A committee may sensibly award fellowships, or may irrationally award them in violation of its own policies. A theory of collective rationality defines collective acts that are evaluable for rationality and formulates principles for their evaluation. This book argues that a group's act is evaluable for rationality if it is the products of acts its members fully control. It also argues that such an act is collectively rational if the acts of the group's members are rational. Efficiency is a goal of collective rationality, but not a requirement, except in cases where conditions are ideal for joint action and agents have rationally prepared for joint action.The people engaged in a game of strategy form a group, and the combination of their acts yields a collective act. If their collective act is rational, it constitutes a solution to their game. A theory of collective rationality yields principles concerning solutions to games. One principle requires that a solution constitute an equilibrium among the incentives of the agents in the game. In a cooperative game some agents are coalitions of individuals, and it may be impossible for all agents to pursue all incentives. Because rationality is attainable, the appropriate equilibrium standard for cooperative games requires that agents pursue only incentives that provide sufficient reasons to act. The book's theory of collective rationality supports an attainable equilibrium-standard for solutions to cooperative games and shows that its realization follows from individuals' rational acts.By extending the theory of rationality to groups, this book reveals the characteristics that make an act evaluable for rationality and the way rationality's evaluation of an act responds to the type of control its agent exercises over the act. The book's theory of collective rationality contributes to philosophical projects such as contractarian ethics and to practical projects such as the design of social institutions.

When new technologies create risks, government agencies use regulations to control the risks. This paper advances a method of evaluating a democracy’s regulation of risks. It assumes that a regulatory agency should act as the public would act in ideal conditions for negotiation if the public were rational and informed. The method relies on decision theory and game theory to ascertain whether a regulation has the public’s informed support. The Occupational Safety and Health Administration’s regulation of exposure to carcinogens in the workplace illustrates the account of regulation. The illustration draws attention to a distinction between physical and information-sensitive risks. Regulations guided by the physical sciences alone may overlook the value of reducing information-sensitive risks. These risks exist objectively, and rational people generally have an aversion to them. An information-sensitive risk and an aversion to it may persist after acquisition of all available relevant information. Democratic regulation justifiably aims to reduce such risks.

Causal decision theory produces decision instability in cases such as Death in Damascus where a decision itself provides evidence concerning the utility of options. Several authors have proposed ways of handling this instability. William Harper (1985 and 1986) advances one of the most elegant proposals. He recommends maximizing causal expected utility among the options that are causally ratifiable. Unfortunately, Harper's proposal imposes certain restrictions; for instance, the restriction that mixed strategies are freely available. To obtain a completely general method of handling decision instability, I step outside the confines of pure causal decision theory. I introduce a new kind of backtracking expected utility and propose maximizing it among the options that are causally ratifiable. In other words, I propose a hierarchical maximization of (1) conditional causal expected utility and (2) the new backtracking expected utility. I support this proposal with some intuitive considerations concerning the distinction between optimality and conditional optimality. And I prove that the proposal yields a solution in every finite decision problem