Maximizing Freedom of Decision: an Axiomatic Analysis

Abstract

In many decision situations that individuals face it seems reasonable from either a philosophical or a personal psychological standpoint to concentrate on maximizing subsequent freedom of choice rather than current expected utility. It may be argued against this view that a sufficiently rich decision framework will take account of the utility of such second-order effects as future freedom of decision, properly discounted, of course. But I am deeply sceptical of such all-encompassing utility functions. Most of the time if we maximize in any evident way at all it is in some local and fragmentary fashion. John Stuart Mill’s classic but weak defence of liberty of thought, feeling and public opinion in utilitarian terms is another reason for scepticism about an unrestricted application of the maxim to maximize expected utility. Above all, what empirical studies of individual decision-making we have do not support any grand thesis about maximizing behaviour. The studies too are about local and fragmentary decisions: buying certain goods, betting on horses, buying lottery tickets, choosing a medical treatment, etc.

It is a pleasure to dedicate this chapter to Kenneth Arrow, from whom I have learned a lot. Our friendship goes back more than thirty years. I am indebted to Peter Hammond for several helpful suggestions.