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Probability and Utility

  • John M. Vickers
Chapter
  • 118 Downloads
Part of the Philosophical Studies Series book series (PSSP, volume 56)

Abstract

“The subject of [our] investigation is sometimes the instruments, sometimes the use of them.”1

Keywords

Simple Theory Indifference Curve General Utility Partial Belief Objective Rule 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.
    Aristotle, Nichomachean Ethics, 1112b.Google Scholar
  2. 2.
    The general theory was developed by G. Debreu in Theory of Value: An Axiomatic Analysis of Economic Equilibrium (Cowles Foundation Monograph, 17) Yale University Press, New Haven, 1959.Google Scholar
  3. 2a.
    For a more recent and slightly more comprehensive development see Kenneth J. Arrow and F. J. Hahn, General Competitive Analysis, Holden-Day, Inc. San Francisco, and Oliver and Boyd, Edinburgh, 1971.Google Scholar
  4. 3.
    See, for example, the theory of R. C. Jeffrey in The Logic of Decision, University of Chicago Press, Chicago and London, 1983 (second edition).Google Scholar
  5. 4.
    This is the Weber — Fechner law. See, for example, E. G. Boring, History of Experimental Psychology, New York, 1950 (second edition) for an account.Google Scholar
  6. 5.
    The view of Hans-Werner Sinn is not far from this. See “Psychophysical laws in risk theory,” Journal of Economic Psychology, 6, (2) (June, 1985) 185–206.Google Scholar
  7. 6.
    Capital, International Publishers, New York, 1967, I.1.3, (page 47).Google Scholar
  8. 7.
    As is attested to by the burgeoning recent literature on common knowledge. See, for example, Brian Skyrms, The Dynamics of Rational Deliberation, Harvard University Press, Cambridge, Massachusetts and London, England, 1990.Google Scholar
  9. 8.
    The principle is asserted with certain variations in many works in classical decision theory, such as L. J. Savage, The Foundations of Statistics, New York, John Wiley and Sons, 1954, as well as in the work of Jeffrey cited above. The variations are unimportant for the present discussion.Google Scholar
  10. 9.
    The history of commodity utility is recounted in George Stigler, “The Development of Utility Theory,” Journal of Political Economy, 58, (1950) 307–396CrossRefGoogle Scholar
  11. 9a.
    Kenneth Arrow, “Alternative Approaches to the Theory of Choice in Risk-Taking Situations,” Econometrica, 19 (1951) 405–438. The best account of the history of propositional utility is still that of L. J. Savage in The Foundations of Statistics, ch. 5.Google Scholar
  12. 10.
    In books 2 and 3 of De Anima. Google Scholar
  13. 11.
    With the evident exception of cases like that of the frog and its fly.Google Scholar
  14. 12.
    Capital, I.1.1, 35.Google Scholar
  15. 13.
    John von Neumann and Oskar Morgenstern, The Theory of Games and Economic Behavior, Princeton, Princeton University Press, 1953 (third edition). The theory of utility is given in section 3 of chapter 1.Google Scholar
  16. 14.
    “Concepts like “specific utility of gambling” cannot be formulated free of contradiction on this level.” 28.Google Scholar
  17. 15.
    Nichomachean Ethics, 1142b. Aristotle does not however agree that such a man deliberates well; for him good deliberation tends to achieve good ends. He would say that one who brings evil upon himself may have calculated well, but that he could not have deliberated well.Google Scholar
  18. 16.
    Maurice Allais, “Le comportement de l’homme rationnel devant le risque: Critique des postulats et axiomes de l’école américaine,” Econometrica, 21 (1953) 503–546.CrossRefGoogle Scholar
  19. 16a.
    Daniel Ellsberg, “Risk, Ambiguity, and the Savage Axioms,” Quarterly Journal of Economics, 75 (1961) 643–669. More recent work on the question (as well as Ellsberg’s article) is found in the valuable collection, Decision, Probability, and Utility, ed. Peter Gardenfors and Neils-Eric Sahlin, Cambridge, Cambridge University Press, 1988.CrossRefGoogle Scholar
  20. 17.
    In the worked-out theory, Q is strict preference (transitive and asymmetric) and events neither of which is preferred to the other are indifferent.Google Scholar
  21. 18.
    This is not to ignore the many complexities and difficulties in the way of this expression. There is nevertheless substantial work on the question. Let me cite just two sources: John Barwise and John Perry, Situations and Attitudes, MIT Press, Cambridge, Mass., 1983Google Scholar
  22. 18a.
    Donald Davidson, Essays on Actions and Events, Oxford, Clarendon Press, 1980, essays 6–10.Google Scholar
  23. 19.
    See R. Duncan Luce, Individual Choice Behavior, John Wiley and Sons, New York, 1959. The approach sketched here is a ramification and reformulation of Luce’s account. The leading idea is that preference is fundamentally stochastic or probabilistic.Google Scholar
  24. 20.
    A general and simple theory of probability as an operator of this sort (as a quantifier) is developed in J. M. Vickers, Chance and Structure: An Essay in the Logical Foundations of Probability, Clarendon Press, Oxford, 1988, chapters 4 and 5.Google Scholar
  25. 21.
    See Donald Davidson, “The Logical Form of Action Sentences,” in Actions and Events. Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1993

Authors and Affiliations

  • John M. Vickers
    • 1
  1. 1.Claremont Graduate SchoolUSA

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