Preference, Choice-Worthiness, and Rationality: Defending a New Theory of Rational Choice Under Risk

This book addresses the question of how one ought to choose when one is uncertain about what outcomes will result from one’s choices, but when one can nevertheless assign probabilities to the different possible outcomes. These choices are commonly referred to as choices under risk. Specifically, this book develops and motivates a new normative theory of rational choice under risk, namely expected comparative utility (ECU) theory. Roughly, for any agent, S, faced with any choice under risk, ECU theory says that S ought to measure and rank her options (in terms of how choiceworthy they are) according to their ECU and S ought to choose whichever option carries the greatest ECU (or one of them in the event that several options are tied). The ECU of an option is a probability‐weighted sum of each of its possible comparative utilities. For any option, a, and for any possible state of the world, G, the comparative utility of a in G is the difference in utility, in G, between a and whichever alternative(s) to a carry the greatest utility in G. This book shows that in some commonplace decisions under risk, ECU theory gives different recommendations from those of expected utility theory, the standard normative theory of rational choice under risk.