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Decision theory for agents with incomplete preferences

Author

Listed:
  • Bales, Adam
  • Cohen, Daniel
  • Handfield, Toby

Abstract

Orthodox 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.

Suggested Citation

  • Bales, Adam & Cohen, Daniel & Handfield, Toby, 2013. "Decision theory for agents with incomplete preferences," MPRA Paper 49954, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:49954
    as

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    References listed on IDEAS

    as
    1. McClennen,Edward F., 1990. "Rationality and Dynamic Choice," Cambridge Books, Cambridge University Press, number 9780521360470, November.
    2. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
    3. Broome, John, 2006. "Weighing Lives," OUP Catalogue, Oxford University Press, number 9780199297702.
    4. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    5. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February.
    6. Bykvist, Krister, 2006. "Prudence for Changing Selves," Utilitas, Cambridge University Press, vol. 18(3), pages 264-283, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Decision theory; incommensurate value; practical reason; incomplete preferences; dominance;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other

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