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Decision theory for agents with incomplete preferences

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  • Bales, Adam
  • Cohen, Daniel
  • Handfield, Toby

Abstract

Orthodox decision theory gives no advice to agents who hold two goods to be incommensurate in value because such agents will have incomplete preferences. According to standard treatments, rationality requires complete preferences, so such agents are irrational. Experience shows, however, that incomplete preferences are ubiquitous in ordinary life. In this paper, we aim to do two things: (1) show that there is a good case for revising decision theory so as to allow it to apply non-vacuously to agents with incomplete preferences, and (2) to identify one substantive criterion that any such non-standard decision theory must obey. Our criterion, Competitiveness, is a weaker version of a dominance principle. Despite its modesty, Competitiveness is incompatible with prospectism, a recently developed decision theory for agents with incomplete preferences. We spend the final part of the paper showing why Competitiveness should be retained, and prospectism rejected.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49954.

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Date of creation: 09 Sep 2013
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Handle: RePEc:pra:mprapa:49954

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Keywords: Decision theory; incommensurate value; practical reason; incomplete preferences; dominance;

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  1. Broome, John, 2004. "Weighing Lives," OUP Catalogue, Oxford University Press, number 9780199243761, September.
  2. Manishi Prasad & Peter Wahlqvist & Rich Shikiar & Ya-Chen Tina Shih, 2004. "A," PharmacoEconomics, Springer Healthcare | Adis, vol. 22(4), pages 225-244.
  3. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February.
  4. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
  5. Bykvist, Krister, 2006. "Prudence for Changing Selves," Utilitas, Cambridge University Press, vol. 18(03), pages 264-283, September.
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