Theyargue, instead, that a person is a succession of overlapping selvesrelated to varying degrees by memories, physical continuities, andsimilarities of character and interests, etc. By this view, it may bejust as rational to discount one’s “own” futurepreferences, as to discount the preferences of another distinctindividual, because the divisions between the stages of one’slife may be as “deep” as the distinctions betweenindividuals. There is some evidence that the standard discounted utility modeldoes not adequately represent human behaviour. For a simple example,consider a person who prefers one apple today to two apples tomorrow,but yet (today) prefers two apples in 51 days to one apple in 50 days.Although this is a plausible preference pattern, it is incompatiblewith the exponentially discounted utility model. It canhowever be accounted for in a bifactorial model with a decliningdiscount rate.
Preference Formation and Attitude Research
It thusacknowledges that their answers are possibly influenced by otherpreferences, e.g. for privacy, status or pretend play, and explainswhy answers may not be true. This interpretationtreats answers as agents‘ privileged access to their own minds; and itbecomes difficult to explain „false“ answers. The first defines analternative X as “at least as good as” analternative Y if and only if X is chosen from someset of alternatives that also contains Y. Today, itserves to derive preference orderings from an agent’s observedchoices, and to test the empirical validity of the preference axiomsby testing for the violation of choice axioms (Grüne-Yanoff2004). Simplified, SARP says that if from a set of alternatives A1, X is chosen while Y is available, and if in someother set of alternatives A2, Y is chosen while Z is available, then there can beno set of alternatives containing alternatives X andZ for which Z is chosen and X is not.
Decision Theory
Furthermore,mentalists also distinguish between those agents who indeed havepreferences as states of minds – e.g. humans, and maybehigher animals – and those agents who donot – e.g. machines, plants or institutions. The formercategory may choose on the basis of their preferences, and hence theabove-discussed effort can aim at eliciting the preferences on whichtheir choices are based. The latter category, despite their lack ofstates of mind, may nevertheless exhibit behaviour that can beinterpreted as relational choice. The basic idea of interval preference measurement is to assume thatacts have uncertain consequences, and that each act is equivalent to alottery between these outcomes. Thisapproach was pioneered by Ramsey (1928) and refined by von Neumann andMorgenstern (1944); other approaches have been presented by Savage(1954/72) and Jeffrey (1965/90). There are substantial differencesbetween these approaches and their respective assumptions.
3 Formal representation
However, there is an ongoingdiscussion amongst philosophers whether the current concept ofpreference used by economists is this mental,“folk-theoretic” notion or a separate theoretical concept(Mäki 2000, Ross 2014, Thoma 2021). Arguably, defenders of resolute choice actually have in mind adifferent interpretation of sequential decision models, whereby future“choice points” are not really points at which an complete guide to accounts receivable process agent isfree to choose according to her preferences at the time. If this isright, it amounts to changing the question or the problem ofinterest. In what follows, thes standard interpretation of sequential decision models will be assumed, and moreover, it will be assumed that rational agents reason aboutsuch decisions in a sophisticated manner (as per Levi 1991, Maher1992, Seidenfeld 1994, amongst others).
Against the temporal neutrality of preferences, some have argued thatthere is no enduring, irreducible entity over time to whom all futureutility can be ascribed; they deny that all parts of one’s future areequally parts of oneself (Parfit 1984). They argue, instead,that a person is a succession of overlapping selves related to varyingdegrees by memories, physical continuities, and similarities ofcharacter and interests, etc. By this view, it may be just as rationalto discount one’s „own“ future preferences, as to discount thepreferences of another distinct individual, because the divisionsbetween the stages of one’s life may be as “deep” as thedistinctions between individuals. There is a wealth of evidence that the discounted utility model doesnot adequately represent human behaviour.
In accordance with a long-standingphilosophical tradition, A≻B is taken to represent “B is worse thanA”, as well as “A is better thanB”. Millgram (1998) arguesthat knowledge of the way such desires-at-will were brought aboutmakes it impossible for them to actually function as the desires theyare intended to be. What ismissing, he points out, are the backward-directed inferentialcommitments that genuine preferences bring with them. Only if oneforgets that one acquired a specific preference at will, or if onealso acquires the inferential commitments of such a preference, canpreferring-at-will be successful.
In the book Savagepresents a set of axioms constraining preferences over a set ofoptions that guarantee the existence of a pair of probability andutility functions relative to which the preferences can be representedas maximising expected utility. Nearly three decades prior to thepublication of the book, Frank P. Ramsey (1926) had actually proposed that adifferent set of axioms can generate more or less the sameresult. Nevertheless, Savage’s theory has been much moreinfluential than Ramsey’s, perhaps because Ramsey neither gave afull proof of his result nor provided much detail of how it would go(Bradley 2004).
- Moreover, it allows for a particularapproach to scientific inference, including key concepts like“evidence”, “evidential support”,“induction” versus “abduction”, and thebearing of “coherence” and “explanatory power”on truth (see the relevant SEP entries).
- A stronger version, SARP, is discussed in the firstpart of the supplementary document.
- Some critics argue thatsome or all preferences are in fact a kind of belief, and hence opento the same rational criticism as beliefs.
- The questionarises as to whether this framework is adequate for handling morecomplex scenarios, in particular those involving a series or sequenceof decisions; these are referred to as sequential decisionproblems.
Such aggregation can also be performed by abenevolent planner striving to take the wishes and/or interests of allconcerned persons into account. Such reductions areusually performed by first translating all preference relations intosome numerical value, and then, for each alternative, adding up thevalues assigned to it for all aspects. In utilitarian moralphilosophy, a fictional value unit, “utile”, is used forthis purpose.
Must a rational agent havea defined preference between, say, two career options that pull indifferent directions as regards opportunities for creativeself-expression versus community service (perhaps a career as a dancerversus a career as a doctor in remote regions)? When the above holds, we say that there is an expected utilityfunction that represents the agent’s preferences; in otherwords, the agent can be represented as maximising expectedutility. In our continuing investigation of rational preferences overprospects, the numerical representation(or measurement) of preference orderings will becomeimportant. The two main types of utility function that will playa role are the ordinal utility function and the moreinformation-rich interval-valued (or cardinal)utility function. Fourthly, some choices are not based on stable preferences overactions, but are constructed from more basic cognitive and evaluativeelements.