On expected utility, part 4: Dutch books, Cox, and Complete Class

Previously in sequence: Skyscrapers and madmen; Why it can be OK to predictably lose; VNM, separability, and more This is the final essay in a four-part series on expected utility maximization (EUM). This part focus on theorems that aim to justify the subjective probability aspect of EUM, namely: Dutch Book theorems; Cox’s Theorem (this one… Continue reading On expected utility, part 4: Dutch books, Cox, and Complete Class

On expected utility, part 3: VNM, separability, and more

Previously in sequence: Skyscrapers and madmen; Why it can be OK to predictably lose This is the third essay in a four-part series on expected utility maximization (EUM). This part examines three theorems/arguments that take probability assignments for granted, and derive a conclusion of the form: “If your choices satisfy XYZ conditions, then you act… Continue reading On expected utility, part 3: VNM, separability, and more

On expected utility, part 2: Why it can be OK to predictably lose

Previously in sequence: Skyscrapers and madmen This is the second essay in a four-part series on expected utility maximization (EUM). This part focuses on why it can make sense, in cases like “save one life for certain, or 1000 with 1% chance,” to choose the risky option, and hence to “predictably lose.” The answer is… Continue reading On expected utility, part 2: Why it can be OK to predictably lose

On expected utility, part 1: Skyscrapers and madmen

Summary: Suppose that you’re trying to do something. Maybe: get a job, or pick a restaurant, or raise money to pay medical bills. Some people think that unless you’re messing up in silly ways, you should be acting “as if” you’re maximizing expected utility – i.e., assigning consistent, real-numbered probabilities and utilities to the possible… Continue reading On expected utility, part 1: Skyscrapers and madmen