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Risk and rationality

By: Buchak, Lara

0198801289 / 9780198801283
2 in stock Need More ?
24 cm 272 pages
Professional & Vocational  Learn More Tertiary Education (US: College)
Reprint. Originally published: 2013.

Lara Buchak sets out an original account of the principles that govern rational decision-making in the face of risk.

A distinctive feature of these decisions is that individuals are forced to consider how their choices will turn out under various circumstances, and decide how to trade off the possibility that a choice will turn out well against the possibility that it will turn out poorly.

The orthodox view is that there is only one acceptable way to do this:rational individuals must maximize expected utility.

Buchak's contention, however, is that the orthodox theory (expected utility theory) dictates an overly narrow way in which considerations about risk can play a role in an individual's choices.

Combining research from economics and philosophy, she arguesfor an alternative, more permissive, theory of decision-making: one that allows individuals to pay special attention to the worst-case or best-case scenario (among other 'global features' of gambles).

This theory, risk-weighted expected utility theory, better captures the preferences of actual decision-makers.

Furthermore, it isolates the distinct roles that beliefs, desires, and risk-attitudes play in decision-making.

Finally, contra the orthodox view, Buchak argues that decision-makers whosepreferences can be captured by risk-weighted expected utility theory are rational.

Thus, Risk and Rationality is in many ways a vindication of the ordinary decision-maker-particularly his or her attitude towards risk-from the point of view of even ideal rationality.


GPQ Decision theory: general, HP Philosophy, JMR Cognition & cognitive psychology

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