tag:blogger.com,1999:blog-4978426466915379555.post3552076764773256040..comments2022-04-03T17:42:26.625-04:00Comments on Formal Methods in Political Philosophy: FORMALMETHODS IN POLITICAL PHILOSOPHY THIRD INSTALLMENTRobert Paul Wolffhttp://www.blogger.com/profile/11970360952872431856noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-4978426466915379555.post-52276264509541299702010-05-10T23:09:36.925-04:002010-05-10T23:09:36.925-04:00"The appropriate response to that claim is no..."The appropriate response to that claim is not Rational Choice Theory. It is the guillotine."<br /><br />Well put.Eric Brandomhttps://www.blogger.com/profile/16248409387730547907noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-26845458726868739492010-05-10T20:58:56.276-04:002010-05-10T20:58:56.276-04:00It's all pretty vague in my mind, but I will t...It's all pretty vague in my mind, but I will try to explain what I meant. <br /><br />In the case of one shot gambles, I understood your point to be that the rationale for basing one's choice on mathematical expectation (i.e., that in the long run one's gain will average out to what's mathematically expected) doesn't apply. So the job I took to be one of providing a modified rationale on which to base one's choice in one-off cases.<br /><br />Then it occurred to me that the modified rationale could be something like what Bernoulli suggests for the St. Petersburg Paradox. The more income I already have at my disposal, the less reluctant I'd be to part with some of it, and thus the more willing to take risks. So my preference for risk in one-shot gamble, and how much I'm willing to risk, depends in part on how much money I've already got, and in part on some unknown quantity to be empirically determined about my taste for gambling. <br /><br />Not sure if I am representing Bernoulli's proposal correctly, and also what I had in mind, but this is the best I can come up with.Boram Leehttps://www.blogger.com/profile/16480969473942923037noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-14056752151246120332010-05-10T20:13:02.368-04:002010-05-10T20:13:02.368-04:00Thanks, most fun post so far in my opinion. Two qu...Thanks, most fun post so far in my opinion. Two questions:<br /><br />1. Diminishing marginal utility: Some economists will point out that, if you really want to, you can accommodate any data (even lottery tickets and life insurance) without giving up diminishing marginal utility. But this is, on Popperian grounds, a weakness of the theory. But let's say the economist went another route by agreeing that individual utility functions will be irregular, but that this will wash out when aggregated. As prices reflect massive aggregates, we can safely use this assumption when discussing prices. Any objection to this?<br /><br />2. You say that RTC presupposes that we know all possible outcomes and their probabilities. Surely this is too strong? Does RTC not just say that we use the information concerning outcomes that we are aware of efficiently? Not that I am saying this is true, but it is more defensible.Unknownhttps://www.blogger.com/profile/13068383050573818153noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-44226054288918054112010-05-10T20:07:35.197-04:002010-05-10T20:07:35.197-04:00Boram Lee, I don't understand the last questio...Boram Lee, I don't understand the last question. What job would it get done, and how?Robert Paul Wolffhttps://www.blogger.com/profile/11970360952872431856noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-35078534852894385442010-05-10T18:38:52.515-04:002010-05-10T18:38:52.515-04:00The requirement that we know all the outcomes and ...The requirement that we know all the outcomes and their probabilities looks like an idealizing requirement more suitable to a normative theory than an explanatory one. So if one uses rational choice theory to explain economic behavior, I don't see why one should stick to that requirement. <br /><br />Normative theories like ideal observer theories require full information, but then they are vulnerable to the conditional fallacy. Actual agents, precisely because they lack full information, can have good reasons to gather more information, or to satisfice rather than maximize, but ideal agents can have no such reasons. <br /><br />(I still don't understand Bernoulli's formula, but probably it's just my numerical illiteracy. From your explanation it's not clear whether D = winnings or previous fortune. But I take it that the key point is the introduction of a notion of expected utility that can diverge from monetary value and has decreasing marginal utility with increasing consumption.)<br /><br />On your final point about maximizing expected utility in one-shot gambles... couldn't the utility from one's risk preference/aversion (instead of mathematical expectation) get the job done?Boram Leehttps://www.blogger.com/profile/16480969473942923037noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-47833660573899394262010-05-10T15:13:12.290-04:002010-05-10T15:13:12.290-04:00There are a number of problems with revealed prefe...There are a number of problems with revealed preferences, and they are not just mathematical. The principal problem is that the theory ceases to be a guide to rational choice and becomes a tautological description of actual choice. See my earlier comments about Sophie's Choice. I will have more to say about this down the line.Robert Paul Wolffhttps://www.blogger.com/profile/11970360952872431856noreply@blogger.comtag:blogger.com,1999:blog-4978426466915379555.post-54909974978166630192010-05-10T13:19:19.921-04:002010-05-10T13:19:19.921-04:00Because of the difficulties of defining and measur...Because of the difficulties of defining and measuring "utility," as you point out, some economists have resorted to "revealed preferences." Here judgments of preferences can be inferred, assuming that what you chose you actually preferred, and so rankings are made among various commodity bundles on that basis. But I'm not sure that revealed preferences can result in "continuous differentiable functions."Unknownhttps://www.blogger.com/profile/02508381261535877414noreply@blogger.com