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Transformative Decision Rules: Foundations and Applications
KTH, Superseded Departments, Infrastructure.
2003 (English)Doctoral thesis, comprehensive summary (Other scientific)
Abstract [en]

A transformative decision rule alters the representation of a decisionproblem, either by changing the sets of acts and states taken intoconsideration, or by modifying the probability or value assignments.Examples of decision rules belonging to this class are the principleof insufficient reason, Isaac Levi’s condition of E-admissibility, Luceand Raiffa’s merger of states-rule, and the de minimis principle. Inthis doctoral thesis transformative decision rules are analyzed froma foundational point of view, and applied to two decision theoreticalproblems: (i) How should a rational decision maker model a decisionproblem in a formal representation (‘problem specification’, ‘formaldescription’)? (ii) What role can transformative decision rules play inthe justification of the principle of maximizing expected utility?The thesis consists of a summary and seven papers. In Papers Iand II certain foundational issues concerning transformative decisionrules are investigated, and a number of formal properties of this classof rules are proved: convergence, iterativity, and permutability. InPaper III it is argued that there is in general no unique representationof a decision problem that is strictly better than all alternative representations.In Paper IV it is shown that the principle of maximizingexpected utility can be decomposed into a sequence of transformativedecision rules. A set of axioms is proposed that together justify theprinciple of maximizing expected utility. It is shown that the suggestedaxiomatization provides a resolution of Allais’ paradox that cannot beobtained by Savage-style, nor by von Neumann and Morgenstern-styleaxiomatizations. In Paper V the axiomatization from Paper IV is furtherelaborated, and compared to the axiomatizations proposed byvon Neumann and Morgenstern, and Savage. The main results in PaperVI are two impossibility theorems for catastrophe averse decisionrules, demonstrating that given a few reasonable desiderata for suchrules, there is no rule that can fulfill the proposed desiderata. In PaperVII transformative decision rules are applied to extreme risks, i.e.to a potential outcome of an act for which the probability is low, butwhose (negative) value is high.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2003. , x, 72 p.
Series
Theses in philosophy from the Royal Institute of Technology, ISSN 1650-8831 ; 3
Keyword [en]
transformative decision rule, problem specification, framing, expected utility, decision theory
National Category
Philosophy
Identifiers
URN: urn:nbn:se:kth:diva-3512ISBN: 91-7283-460-9 (print)OAI: oai:DiVA.org:kth-3512DiVA: diva2:9326
Public defence
2003-05-16, 00:00
Note

QC 20100622

Available from: 2003-05-12 Created: 2003-05-12 Last updated: 2017-01-18Bibliographically approved
List of papers
1. Transformative decision rules
Open this publication in new window or tab >>Transformative decision rules
2003 (English)In: Erkenntnis, ISSN 0165-0106, E-ISSN 1572-8420, Vol. 58, no 1, 71-85 p.Article in journal (Refereed) Published
Abstract [en]

A transformative decision rule transforms a given decision problem into another by altering the structure of the initial problem, either by changing the framing or by modifying the probability or value assignments. Examples of decision rules belonging this class are the principle of insufficient reason, Isaac Levi's condition of E-admissibility, the de minimis rule, and the precautionary principle. In the papers some foundational issues concerning transformative decision rules are investigated, and a couple of formal properties of this class of rules are proved.

National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13463 (URN)000181164700006 ()
Note
QC 20100618Available from: 2010-06-18 Created: 2010-06-18 Last updated: 2017-12-12Bibliographically approved
2. Transformative decision rules, permutability, and non-sequential framing of decision problems
Open this publication in new window or tab >>Transformative decision rules, permutability, and non-sequential framing of decision problems
2004 (English)In: Synthese, ISSN 0039-7857, E-ISSN 1573-0964, Vol. 139, no 3, 387-403 p.Article in journal (Refereed) Published
Abstract [en]

The concept of transformative decision rules provides a useful tool for analyzing what is often referred to as the 'framing', or 'problem specification', or 'editing' phase of decision making. In the present study we analyze a fundamental aspect of transformative decision rules, viz. permutability. A set of transformative decision rules is, roughly put, permutable just in case it does not matter in which order the rules are applied. It is argued that in order to be normatively reasonable, sets of transformative decision rules have to satisfy a number of structural conditions that together imply permutability. This formal result gives support to a non-sequential theory of framing, i.e., a theory which prescribes no uniform order in which different steps in the framing process have to be performed.

National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13603 (URN)10.1023/B:SYNT.0000024885.09894.ba (DOI)000220957500002 ()2-s2.0-28844476353 (Scopus ID)
Note
QC 20100622Available from: 2010-06-22 Created: 2010-06-22 Last updated: 2017-12-12Bibliographically approved
3. Rival Representations of Decision Problems
Open this publication in new window or tab >>Rival Representations of Decision Problems
(English)Manuscript (preprint) (Other academic)
National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13595 (URN)
Note
QC 20100622Available from: 2010-06-22 Created: 2010-06-22 Last updated: 2010-06-22Bibliographically approved
4. An argument for the principle of maximizing expected utility
Open this publication in new window or tab >>An argument for the principle of maximizing expected utility
2008 (English)In: Theoria, ISSN 0040-5825, E-ISSN 1755-2567, Vol. 38, no 2, 112-128 p.Article in journal (Refereed) Published
Abstract [en]

The main result of this paper is a formal argument for the principle of maximizing expected utility that does not rely on the law of large numbers. Unlike the well-known arguments by Savage and von Neumann & Morgenstern, this argument does not presuppose the sure-thing principle or the independence axiom. The principal idea is to use the concept of transformative decision rules for decomposing the principle of maximizing expected utility into a sequence of normatively reasonable subrules. It is shown that this procedure provides a resolution of Allais's paradox that cannot be obtained by Savage-style or von Neumann & Morgenstern-style arguments.

Identifiers
urn:nbn:se:kth:diva-13458 (URN)10.1111/j.1755-2567.2002.tb00124.x (DOI)
Note
QC 20100618Available from: 2010-06-18 Created: 2010-06-18 Last updated: 2017-12-12Bibliographically approved
5. From Outcomes to Acts: A Non-Standard Axiomatization of the Expected Utility Principle
Open this publication in new window or tab >>From Outcomes to Acts: A Non-Standard Axiomatization of the Expected Utility Principle
2004 (English)In: Journal of Philosophical Logic, ISSN 0022-3611, E-ISSN 1573-0433, Vol. 33, no 4, 361-378 p.Article in journal (Refereed) Published
Abstract [en]

This paper presents an axiomatization of the principle of maximizing expected utility that does not rely on the independence axiom or sure-thing principle. Perhaps more importantly the new axiomatization is based on an ex ante approach, instead of the standard ex post approach. An ex post approach utilizes the decision maker's preferences among risky acts for generating a utility and a probability function, whereas in the ex ante approach a set of preferences among potential outcomes are on the input side of the theory and the decision maker's preferences among risky acts on the output side.

Keyword
ex ante, ex post, expected utility, Savage, von Neumann, Morgenstern
National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13600 (URN)10.1023/B:LOGI.0000036852.81010.db (DOI)000223705700002 ()2-s2.0-70949101449 (Scopus ID)
Note
QC 20100622 QC 20110926Available from: 2010-06-22 Created: 2010-06-22 Last updated: 2017-12-12Bibliographically approved
6. The limits of catastrophe aversion
Open this publication in new window or tab >>The limits of catastrophe aversion
2002 (English)In: Risk Analysis, ISSN 0272-4332, E-ISSN 1539-6924, Vol. 22, no 3, 527-538 p.Article in journal (Refereed) Published
Abstract [en]

We discuss the management of catastrophe-risks from a theoretical point of view. The concept of a catastrophe is informally and formally defined, and a number of desiderata for catastrophe-averse decision rules are introduced. However, the proposed desiderata turn out to be mutually inconsistent. As a consequence of this result, it is argued that the "rigid" form of catastrophe aversion articulated by, for example, the maximin rule, the maximum probable loss rule, (some versions of) the precautionary principle, and the rule proposed in Ekenberg et al. (1997, 2000) should be given up. An alternative form of "non-rigid" catastrophe aversion is considered.

Keyword
RISK
National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13604 (URN)10.1111/0272-4332.00036 (DOI)000176547800016 ()
Note
QC 20100622Available from: 2010-06-22 Created: 2010-06-22 Last updated: 2017-12-12Bibliographically approved
7. New Technologies And The Ethics Of Extreme Risks
Open this publication in new window or tab >>New Technologies And The Ethics Of Extreme Risks
2001 (English)In: Ends and meansArticle in journal (Refereed) Published
National Category
Philosophy
Identifiers
urn:nbn:se:kth:diva-13462 (URN)
Note
QC 20100618Available from: 2010-06-18 Created: 2010-06-18 Last updated: 2010-06-22Bibliographically approved

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