Foundations and Applications of Decision Theory: Volume I Theoretical Foundations PDF
Preview Foundations and Applications of Decision Theory: Volume I Theoretical Foundations
FOUNDATIONS AND APPLICATIONS OF DECISION THEORY THE UNIVERSITY OF WESTERN ONTARIO SERIES IN PHILOSOPHY OF SCIENCE A SERIES OF BOOKS ON PHILOSOPHY OF SCIENCE, METHODOLOGY, AND EPISTEMOLOGY PUBLISHED IN CONNECTION WITH THE UNIVERSITY OF WESTERN ONTARIO PHILOSOPHY OF SCIENCE PROGRAMME Managing Editor 1. 1. LEACH Editorial Board J. BUB, W. DEMOPOULOS, W. HARPER, J. HINTIKKA, C. A. HOOKER, 1. NICHOLAS, G. PEARCE VOLUME 13 FOUNDATIONS AND APPLICATIONS OF DECISION THEORY VOLUME I THEORETICAL FOUNDATIONS Edited by C.A.HOOKER The University of Western Ontario 1.1. LEACH The University of Western Ontario and E. F. McCLENNEN Washington University. St. Louis D. REIDEL PUBLISHING COMPANY DORDRECHT : HOLLAND / BOSTON: U.S.A. Ubrary of Congress Cataloging in Publication Data Soilcovcr reprint ofthc hardcover I st edition 1978 Main entry under title: Foundations and applications of decision theory. (The University of Western Ontario series in philosophy of seience ; v. 13) Papers resulting from a workshop held at the University of Western Ontario in the spring of 1975. Includes bibliographies and indexes. Contents: v. I. Theoretical foundations.-v. 2 Epistemic and social applications. I. Decision-making-Congresses. J. Hooker, Clifford Alan. II. Leach. James J. III. McClennen, Edward Francis, 1936- IV. University of Western Ontario. The University of Western Ontario series in philosophy of science: v. 13. TS7.95.F68 658.4'03 77-25329 ISBN-13: 978-94-009-9791-2 c-ISBN-13: 978-94-009-9789-9 DOl: 10.1007/978-94-009-9789-9 Published by D. Reidel Publishing Company, P.O. Box 17. DordrechL Holland Sold and distributed in the U.S.A., Canada. and Mexico by D. Reidel Publishing Company, Inc. Lincoln Building. 160 Old Derby Street. Hingham, Mass. 02043, U.S.A. All Rights Reserved Copyright () 1978 by D. R('idel Publishing Company, Dordrecht, Holland and copyrightholders as specified within No part of the material protected by this copyright notke may be reproduced or utilized in any form or by any means, electronic or mechanical. including photocopying, recording or by any informational storage and retrieval system, without wrillen permission from thc copyright owner CONTENTS VOLUMEI PREFACE vii ACKNOWLEDGEMENTS xxiii ANDREW K. BJERRING / The 'Tracing Procedure' and a Theory of Rational Interaction DAVID BRAYBROOKE / Variety Among Hierarchies of Preference 55 TOM R. BURNS and DAVE MEEKER / Conflict and Structure in Multi· Level Multiple Objective Decision·Making systems 67 HUBERT L. DREYFUS and STUART E. DREYFUS / Inadequacies in the Decision Analysis Model of Rationality 115 ALAN GIBBARD and WILLIAM L. HARPER / Counterfactuals and Two Kinds of Expected Utility 125 HANS G. HERZBERGER / Coordination Theory 163 NIGEL HOWARD / A Piagetian Approach to Decision and Game Theory 205 RICHARD C. JEFFREY / Axiomatizing the Logic of Decision 227 ISAAC LEVI/On Indeterminate Probabilities 233 ISAAC LEVI/Irrelevance 263 ERWIN KREYSZIG / On a Decision Theoretic Method for Social Decisions 275 KEITH LEHRER / Consensus and Comparison: A Theory of Social Rationality 283 R. DUNCAN LUCE / Conjoint Measurement: A Brief Survey 311 EDWARD F. McCLENNEN / The Minimax Theory and Expected· Utility Reasoning 337 ISAAC LEVI/Newcomb's Many Problems 369 DORIS OLIN / Newcomb's Problem, Dominance and Expected Utility 385 R. D. ROSENKRANTZ / The Copernican Revelation 399 ILMAR WALDNER / Prolegomena to a Theory of Rational Motives 427 INDEX OF NAMES 443 CONTENTS VOLUME II PREFACE ACKNOWLEDGEMENTS DAVID BRAYBROOKE / Policy-Formation with Issue-Processing and Transformation of Issues JOHN CHAMBERLIN / A Diagrammatic Exposition of the Logic of Collective Action LEON ELLSWORTH / Decision-Theoretic Analysis of Rawls' Original Position DAVID GAUTHIER The Social Con tract: Individual Decision or Collective Bargain? ALFRED KUHN / On Relating Individual and Social Decisions R. D. ROSENKRANTZ / Distributive Justice FREDERIC SCHICK / Toward a Theory of Sociality ALAN R. TEMPLETON and EDWARD D. ROTHMAN / Evolution and Fine-Grained Environmental Runs DONALD WITTMAN / Power in Electoral Games INDEX OF NAMES PREFACE 1. INTRODUCTION In the Spring of 1975 we held an international workshop on the Foundations and Application of Decision Theory at the University of Western Ontario. To help structure the workshop into ordered and manageable sessions we distri buted the following statement of our goals to all invited participants. They in turn responded with useful revisions and suggested their own areas of interest. Since this procedure provided the eventual format of the sessions, we include it here as the most appropriate introduction to these collected papers result ing from the workshop. The reader can readily gauge the approximation to our mutual goals. 2. STATEMENT or OBJECTIVES AND RATIONALE (Attached to this statement is a bibliography; names of persons cited in the statement and writing in this century will be found referenced in the biblio graphy - certain 'classics' aside.) 2.1. Preamble We understand in the following the Theory of Decisions in a broader sense than is presently customary, construing it to embrace a general theory of deciSion-making, induding social, political and economic theory and applica tions. Thus, we subsume the Theory of Games under the head of Decision Theory, regarding it as a particularly clearly formulated version of part of the general theory of decision-making. The Theory of Games began its modern formal development with the pioneering work of von Neumann and Morganstern and has since been developed into a sophisticated mathematical discipline, among others by Arrow, Harsanyi, Luce, Nash, Raiffa, Rapoport and Sen. In recent times, this approach to decision-making has been increas ingly applied to practical aspects of life, e.g., to the analysis of political and military strategy, to political institutions and group behaviour. Of course, vii viii PREFACE micro-economic theory has for a very much longer time employed an explicit decision-theoretic (i.e., cost-benefit) analysis of rational behaviour which, though often cast in somewhat different terms, is essentially that of the Theory of Games. The Theory of Games does not exhaust the content of Decision Theory proper because the former in its present development does not treat of such dimensions as the Theory of Rational Acceptance (or Theory of Rational Belief, i.e., the rational acceptance and change of beliefs), the Theory of Value Dynamics and the theory of individual decision-making against nature. The Theory of Games needs to be properly imbedded in this larger context in order for it to be properly evaluated and fruitfully applied. The totality, together with the collection of applications to economics, poli tics and many other areas, constitutes a general Theory of Decision proper. At the present time no example of a general Theory of Decisions proper exists that is even modestly developed, although several dimensions have been developed quite far (see below for selected references). One of the major purposes of the colloquium is to encourage the development of this larger perspective through the bringing together of outstanding leaders in each of the individual dimensions to obtain the critical interplay of their ideas. Moreover, many applications of the Theory of Garnes to various subject matters are as yet in their infancy (e.g., to anthropology, organizational behaviour), with each employing a distinct terminology and a general lack of perception of common connections to a theoretical base. Another major objective of the colloquium is to contribute to the communications among the various disciplinary fields on this issue and to help to clarify the develop ment of conceptual categories, terminology and theory in relation to the abstract core theory. Both of these aims may properly be described as in ter-disciplinary. In addi tion, the colloquium had several more conventional research goals. Many of the more recent applications, or attempts at application, of the Theory of Games to various disciplinary subjects are highly controversial. One aim of the colloquium is to extend and clarify these applications through exchange of ideas between experts in the disciplinary fields and those who have played a leading role in the development of the abstract theory. In fact, the organisers of this colloquium have a particular intellectual perspective on the unification of applications to various fields and its intellec tual significance. First is the importance of perceiving that there is a unifica tion of theory to be achieved. And second, there is the establishment of a unique unification of explanatory theory with normative theory. Starting PREFACE ix with a formal uninterpreted calculus of rational choice, derived from Game Theory, two types of parameters (descriptive-explanatory and normative) can be plugged into the model to yield both an explanatory social theory of why people believe and act as they do, and a normative theory of how they should act (moral) and believe (epistemic), given their initial beliefs and preferences. The novel generality of the theory, then, derives from the fact that it applies not only to the normative domains of ethics and epistemology. The main thrust of the thesis, and a major goal of the colloquium is to explore the view that the concept of rationality has both explanatory and normative force, that both dimensions of this concept can be theoretically integrated, that the explanatory force has far-reaching applications in all the social scientific disciplines, and that the normative theories must become empirically controlled by the results of the explanatory theory. Finally, the attempt to extend the applications of the Theory of Games to various subject matters (as one of their theoretical foundations) has made clear certain fundamental limitations in the present development of the abstract theory itself - this has to do with the notion of interdependency in decision-making and the development of a dynamical theory. An important aim of the colloquium is to crystalize and coordinate the various research work devoted to the elaboration of the Theory of Games within the context of various interdependence assumptions. In the light of these remarks the colloquium organizers have chosen to develop the colloquium proceedings in four basic sections. These are now dis cussed in more detail. 2.2. Foundations of Decision and Game Theory Foundational issues have already been briefly reviewed in the preamble. As was noted, recent attempts to extend the traditional Theory of Games to actual social and political situations have made certain limitations in that theory increasingly apparent. Specifically, virtually all the original founda tional work done in Game Theory (as a theory of interdependent decision making) has been predicated on the assumption that such a theory is con structable as an extension of the theory of individual, independent decision making against nature (Statistical Decision Theory). Thus it has been assumed that no matter how complex the situation - in terms of the number of participants - an individual participant will choose so as to maximize expec ted utility. In this manner the postulates of the theory of individual, inde pendent decision-making have been regarded as regulative for the theory of x PREFACE interdependent decision-waking, at least in the sense of being logically prior to any other behavioural assumptions which might be introduced. Now it follows trivially from the paradigm of individual, independent choice (where the agent is faced with playing a 'game' alone against an 'indifferent' nature) that such a theory can be articulated in abstraction from consideration of possible interdependencies between different agents with respect to their (i) utilities, (ii) expectations, and (iii) decisions. Yet the essence of a game, in the proper sense of that term, would seem to consist precisely in the presence of a complex set of just such interdependencies. The question naturally arises, then: can the behavioural axioms of the theory of individual, independent choice be carried over to, and serve as the foundations for, a theory of inter dependent choice? Attempts to construct the theory of interdependent choice on such a basis have not been marked with unqualified success. Of particular note here are the following considerations: (i) the recent work of Howard and Schick suggests that there are impor tant solution concepts for a theory of socio-political decision-making which are obtainable only by taking explicit account, in theory construction, of the possible interdependence relations between the utilities of the various parti cipants; (ii) the lack of consensus with regard to the proper analysis of, and solu tion to, the 'Prisoner's Dilemma' type of game, and Newcomb's Paradox - the latter constituting an interesting borderline case between independent and interdependent choice - suggests that as yet insufficient attention has been paid to the precise manner in which the expectations and decisions of dif ferent participants are related; (iii) the recent work of Howard, criticizing the 'Sure Thing' Principle, and the work of McClennen, which purports to show that it is impossible to con struct an adequate Theory of Games if it is assumed that each player always chooses in accordance with the expected utility hypothesis, suggest that theories which are based on expected utility reasoning are inherently limited or inadequate in certain important respects; (iv) the ground-breaking work of such persons as Olson, Schelling and Rapoport, on decision-making within the context of social, political and economic conflict, has yet to be fully generalized and made an integral part of a general theory of choice under conditions of interdependency. Recent treatments of the above-mentioned paradoxes and limitations indicate that there are at least two quite distinct and potentially conflicting remedial approaches. One consists in a reorientation of the Theory of Games
The list of books you might like
