Decision theory for agents with incomplete preferences
AbstractOrthodox 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 49954.
Date of creation: 09 Sep 2013
Date of revision:
Decision theory; incommensurate value; practical reason; incomplete preferences; dominance;
Find related papers by JEL classification:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-26 (All new papers)
- NEP-CDM-2013-09-26 (Collective Decision-Making)
- NEP-MIC-2013-09-26 (Microeconomics)
- NEP-UPT-2013-09-26 (Utility Models & Prospect Theory)
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