RSS

Alter­na­tives to ex­pected value the­ory

TagLast edit: 16 May 2021 13:09 UTC by EA Wiki assistant

Although expected value theory is the dominant paradigm in decision theory, it has problems, such as those raised by bounded and unbounded values, and by causal and evidential approaches. This leaves open the possibility of discovering an alternative decision theory.

One possibility would be to introduce some form of risk aversion into the decision theory, such as that proposed by Lara Buchak (2013). Other alternative theories include rank-dependent expected utility theory, prospect theory, and regret theory, although some of these are more commonly used as descriptive theories than normative models.

Bibliography

Briggs, Rachael (2015) Review of Lara Buchak, Risk and Rationality, Notre Dame Philosophical Reviews, March 14.

Buchak, Lara (2013) Risk and Rationality, Oxford: Oxford University Press.
Defends risk aversion as rational.

Tuthill, Jonathan & Darren Frechette (2002) Non-expected utility theories: Weighted expected, rank dependent, and, cumulative prospect theory utility, Proceedings of the NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management, St. Louis, MO.

Wikipedia (2003) Prospect theory, Wikipedia, March 16 (updated 2 May 2021‎).

Wikipedia (2006) Rank-dependent expected utility, Wikipedia, August 6 (updated 6 November 2020‎).

Wikipedia (2008) Regret (decision theory), Wikipedia, March 31 (updated 10 December 2020‎).

Related entries

altruistic wager | cluelessness | decision theoretic uncertainty | decision theory | expected value | risk aversion | value of information

No entries.
No comments.