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Decision Under Normative Uncertainty

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Abstract

While ordinary decision theory focuses on empirical uncertainty, real decision-makers also normative uncertainty: uncertainty about value itself. Normative uncertainty is comparable to (Harsanyian or Rawlsian) uncertainty in the 'original position', where one's values are unknown. A comprehensive decisiion theory must address twofold uncertainty - normative and empirical. We present a simple model of twofold uncertainty, and show that the most popular decision principle - maximising expected value ('Expectationalism') - has rival formulations, namely Ex-Ante Expectationalism, Ex-Post Expectationalism, and hybrid theories. These rival theories recommend different decisions, reasoning modes, and attitudes to risk. But they converge under an interesting (necessary and sufficient) condition

Suggested Citation

  • Franz Dietrich & Brian Jabarian, 2020. "Decision Under Normative Uncertainty," Documents de travail du Centre d'Economie de la Sorbonne 20015rr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Jun 2021.
    • Handle: RePEc:mse:cesdoc:20015rr
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    Cited by:

    1. Zou, Wenbo & Gao, Wenzheng, 2023. "Measuring the welfare and spillover effects of rank information," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 187-220.
    2. Cecchini, Mathilde, 2024. "Into the Unknown - Conceptualizing Citizens' Experiences of Uncertainty in Citizen-state Interactions," OSF Preprints 96pjt, Center for Open Science.

    More about this item

    Keywords

    normative versus empirical uncertainty; expected value theory; expectationalism; ex-ante versus ex-post approach;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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