13 November. Third Biennial Congress of the Societe de philosophie des sciences (SPS)

Le 3ème Congrès de la Société de Philosophie des Sciences, qui se tiendra du 12 au 13 novembre prochain à l'Ecole Normale Supérieure, a pour thème "Science et Décision". De nombreuses interventions seront donc consacrées à la théorie de la décision et à l'économie. Nous attirons votre attention plus particulièrement sur le Symposium "La méthode en théorie de la décision" qui a pour objectif de rassembler des chercheurs de différents horizons (économie et philosophie) intéressés par la théorie de la décision. Le Symposium se tiendra le vendredi 13 novembre de 16h30 à 18h30. Il est organisé en deux parties. La première partie (1h) est constituée de trois interventions : (i) M. Abdellaoui (GREGHEC & CNRS), (ii) M. Cozic (U. Paris 12 & IHPST) et Brian Hill (HEC & IHPST) et (iii) W. Rabinowicz (U. Lund). La seconde partie (1h) est une table ronde où nous essaierons d'aborder les questions méthodologiques principales que soulèvent les sciences de la décision. Le public sera largement sollicité à cette occasion. Nous espérons vivement vous compter parmi nous !

11 December. Olivier L'Haridon (Greg-HEC & CNRS). Comparing Utility under Risk and Intertemporal Utility

Abstract: Time preferences, discounting and their relation to consistent behaviour have been extensively addressed in the literature on intertemporal choice. The existing experimental studies on intertemporal choice were primarily designed to elicit discount rate and then provide little information about utility and attitudes towards consequences. According to Loewenstein and Prelec (1992) preferences in inter-temporal choice share some common characteristics with preferences under risk. In their work they adopted a utility for individuals, which is consistent with findings relating to utility as measured in decision under risk. This suggests that there may be one unifying concept of utility for inter-temporal choice and for risky choice. In such a framework loss aversion plays a key role as a determinant inter-temporal substitution or as determinant of risk aversion for mixed prospects. In this paper, we present an empirical investigation on the existence of a value function with reference point in intertemporal and risky choice. For that purpose, we elicit on a within-subject basis utility for gains and for losses and a precise evaluation of loss aversion in each domain of choice.

15-16 January. Workshop on Choice Theory at Ecole Polytechnique, Paris.

22 January. Barry Sopher (Rutgers). Consistency and Aggregation in Individual Choice Under Uncertainty: Uncovering the Empirical Basis of Cumulative Prospect Theory.

Abstract: (link).

29 January. Nicolas Gravel (Université de la Méditerranée). Uniform Expected Utility Criteria for Decision Making under Ignorance or Objective Ambiguity.

Abstract: We provide an axiomatic characterization of a family of criteria for ranking completely uncertain and/or ambiguous decisions. A completely uncertain decision is described by the set of all its consequences (assumed to be finite). An ambiguous decisions is described as a finite set of possible probability distributions over a finite set of prices. Every criterion in the family characterized can be thought of as assigning to every consequence (probability distribution) of a decision an equal probability of occurence and as comparing decisions on the basis of the expected utility of their consequences (probability distributions) for some utility function. Paper (link).

5 February. Nicolas Houy (CNRS & Ecole Polytechnique). Revealed Choice Reversals.

Abstract: We weaken the implicit assumption of rational choice theory that imposes that preferences do not depend on the choice set. We concentrate on the cases where the preferences change monotonically when the choice set expands. Then, we show the relation between choice set dependent choices and revealed preferences.

19 March. Igor Kopylov (University of California, Irvine). Ambiguity Aversion, Choice Deferral, and Subjective Probabilities.

Abstract: When confronted with uncertain prospects, people often exhibit both choice deferral and Ellsberg-type ambiguity aversion. This paper obtains a joint representation for these behavioral phenomena. The decision maker as portrayed by my model is willing to choose an uncertain prospect f over g rather than to defer this choice if and only if the expected utility of f is greater or equal than the expected utility of g for every probability mea- sure in a convex and closed set ∆. This set is interpreted as a collection of her possible future beliefs. When choices cannot be deferred, the deci- sion maker evaluates every uncertain prospect via an ε-mixture of the least favorable element in the set ∆ and her current probabilistic belief p ∈ ∆. All components of my model are derived from observable preferences in an essentially unique way. Paper (link)

26 March. Franz Dietrich (London School of Economics). A reason-based theory of rational choice.

INFORMATION: Franz Dietrich's seminar will take place at ENS: Salle Weil, ENS, 45 rue d'Ulm, 75005 Paris, Metro: Luxembourg or Censier-Daubenton. A map is available here

Abstract: The standard rational choice paradigm explains an individual’s preferences by his beliefs and his fundamental desires. For instance, someone’s preference for joining the army might be explained by certain beliefs about what life in the army is like and a desire for such a life. While beliefs may change (by new information), fundamental desires are totally fixed.One shortcoming of this paradigm is that reasons and motivations play no explicit role. Some of the more fundamental preference changes that one can undergo seem to reach beyond information-learning and to involve a change in the reasons or goals by which one is fundamentally motivated. Such changes of motivating reasons may come in connection with a changing ability to abstractly represent certain aspects of the world (like the thirteenth move in a game) or to imagine certain qualitative aspects of the world (like feelings of complete loneliness). Standard rational choice models implicitly assume away such changes. This paper proposes a formal reason-based model of preferences. The model explains an individual’s preferences by the set of reasons that motivate him. The preference of our example individual for joining the army would be explained by the set of reasons that motivate him, such as service to his country, an athletic body, and comradeship. Preference change in our model thus stems not exclusively from new information but often also from a change of the set of motivating reasons. If our example individual suddenly loses his preference for joining the army and joins a charity, new reasons (such as worldwide justice) might have become motivating while others (such as an athletic body) might have lost their motivational power. Our notion of a ‘(motivating) reason’ is open to different interpretations and applications, like ones related to conceptualisation or imagination abilities. We formulate two natural axioms on reason-based preferences, the first ensuring that preferences are determined by the motivating reasons and the second ensuring that preferences change in a coherent way as additional reasons become motivating. These two axioms are shown to imply a parsimonious representation of preferences: a single binary relation (which ranks the consistent reason sets) is sufficient to generate all individual preferences across possible individual states (i.e., possible sets of motivating reasons). Paper (link)

16 April. Shachar Kariv (Berkeley). Estimating Ambiguity Aversion in a Portfolio Choice Experiment.

Abstract: We report a laboratory experiment that enables us to estimate parametric models of ambiguity aversion at the level of the individual sub ject. We use two main specifications, a “kinked” specification that nests Maxmin Expected Utility, Choquet Expected Utility, α-Maxmin Expected Utility, and Contraction Expected Utility and a “smooth” specification that nests the various theories referred to collectively as Recursive Expected Utility. Our sub jects solved a series of portfolio-choice problems. The assets are Arrow securities corresponding to three states of nature, where the probability of one state is known and the remaining two are ambiguous. The sample exhibits considerable heterogeneity in preferences, as captured by parameter estimates. Nonetheless, there exists a strong tendency to equalize the demands for the securities that payoff in the ambiguous states, a feature more easily accommodated by the kinked specification than by the smooth specification. We also find that a large number of subjects are well described by the ambiguity-neutral Subjective Expected Utility model.

4 June. Richard Bradley (LSE). Option Uncertainty and Counterfactual Reasoning.

Abstract: When making decision it is not just uncertainty about the state of the world that matters, but also uncertainty about the desirability of the possible consequences of our actions (ethical uncertainty) and uncertainty about what the state of the world would be were we to pursue one or another course of action (option uncertainty). In this paper, option uncertainty is modelled using a multidimensional possible-worlds model in which the state of the world under different suppositions about what action might be performed or what conditions might pertain is represented by a vector of possible worlds. The model is used to examine the (often hidden) assumptions that are required in order to derive expected utility theory and to examine the issue of how to adequately formulate causal decision theory.