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In this book, Paul Anand examines the normative interpretation of Subjective Expected Utility (SEU). He tests the philosophical and logical basis for associating SEU with rational choice. Decision theorists have increasingly come to accept the experimental evidence that subjects systematically violate the axiomatic assumptions of SEU, and as a result the past decade has witnessed an explosion of mathematical models that seek to capture this behaviour. A current issue is whether axioms of SEU really are canons of rationality. Anand discusses whether the new decision-theoretic models are more than just accounts of irrational behaviour. The main themes of the book are that, empirically, SEU is false, and that normatively it
imposes unnecessary constraints on rational agency. Problems with Bayesianism are introduced and it is shown that useful distinctions between risk and uncertainty (in a Keynesian sense) can be made. Some of the radical methodological changes in economics that underpin theoretical developments in decision theory and economics are also discussed.
Readership: Undergraduates and graduates on economics and some other social science degrees taking courses in decision theory, economics of risk and uncertainty, and economics of choice (supplementary reading); anyone interested in the analysis of risk and uncertainty.
Paul Anand, Reader in Decision Theory, De Montfort University, Leicester
"Shows an agreeable lack of fetish for technical and mathematical presentation, and will serve as a fairly accessible introduction to the area for philosophical readers unfamiliar with the terrain" - David Phillips, University of Houston, Philosophical Review
"[Paul Anand makes] clearly a case for reversing the direction of much economic theorizing" - Times Higher Education Supplement