Foundations of Utility and Risk Theory with Applications

1. Front Matter

   Pages i-ix

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2. Introduction

   1. Front Matter

      Pages 1-1

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   2. Opening Address

      • Maurice Allais

      Pages 3-4

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   3. Paradoxes and Their Solutions

      • Ole Hagen

      Pages 5-17

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   4. Behavior under Uncertainty and Its Implications for Policy

      • Kenneth J. Arrow

      Pages 19-32

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3. Concepts of Probability

   1. Front Matter

      Pages 33-33

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   2. Frequency, Probability and Chance

      • Maurice Allais

      Pages 35-86

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   3. Utility Analysis from the Point of View of Model Building

      • Herman Wold

      Pages 87-93

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   4. On Second Order Probabilities and the Notion of Epistemic Risk

      • Nils-Eric Sahlin

      Pages 95-104

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4. Arguments Against Expected Utility

   1. Front Matter

      Pages 105-105

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   2. Expected Utility Theory does Not Apply to All Rational Men

      • J. M. Blatt

      Pages 107-116

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   3. Sure-Thing Doubts

      • Edward F. McClennen

      Pages 117-136

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   4. The Pre-Outcome Period and the Utility of Gambling

      • Robin Pope

      Pages 137-177

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5. Probability and Utility in Reality

   1. Front Matter

      Pages 179-179

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   2. Empirical Demonstration that Expected Utility Decision Analysis is Not Operational

      • Mark McCord, Richard de Neufville

      Pages 181-199

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   3. Risk Attitude Hypotheses of Utility Theory

      • Roman Krzysztofowicz

      Pages 201-216

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   4. Probabilistic Forecasts: Some results and speculations

      • George Wright

      Pages 217-232

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   5. The Supra-Additivity of Subjective Probability

      • George Wright, Peter Whalley

      Pages 233-244

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6. Choice Withoud Expected Utility

   1. Front Matter

      Pages 245-245

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   2. A Decision Analysis Model When the Substitution Principle is Not Acceptable

      • Héctor A. Múnera, Richard de Neufville

      Pages 247-262

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In this volume we present some o~ the papers that were delivered at FUR-82 - the First International Con~erence on Foundations o~ Utility and Risk Theory in Oslo, June 1982. The purpose o~ the con~erence was to provide a ~orum within which scientists could report on interesting applications o~ modern decision theory and exchange ideas about controversial issues in the ~oundations o~ the theory o~ choice under un­ certainty. With that purpose in mind we have selected a mixture of applied and theoretical papers that we hope will appeal to a wide spectrum o~ readers ~rom graduate students in social science departments and business schools to people involved in making hardheaded decisions in business and government. In an introductory article Ole Hagen gives an overview o~ various paradoxes in utility and risk theory and discusses these in the light o~ scientific methodology. He concludes the article by calling ~or joint efforts to provide decision makers with warkable theories. Kenneth Arrow takes up the same issue on a broad basis in his paper where he discusses the implications o~ behavior under uncertainty for policy. In the theoretical papers the reader will ~ind attempts at de~initive Statements of the meaning o~ old concepts and suggestions for the adoption o~ new concepts. For instance, Maurice Allais discusses four di~ferent interpretations o~ the axioms o~ probability and explains the need ~or an empirical characterization o~ the concept of chance.

• environment
• evaluation
• game theory
• information
• nature
• organization
• organizations

• University of Olso, Norway

  Bernt P. Stigum

• Norwegian School of Management, Bekkestua, Norway

  Fred Wenstøp

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