Orri Stefansson, Hlynur
(2014)
Decision theory and counterfactual evaluation.
PhD thesis, London School of Economics and Political Science.
Abstract
The value of actual outcomes or states of affairs often depends on what could have been. Such dependencies create well-known “paradoxes” for decision theory, the best-known perhaps being the so-called Allais Paradox. The primary aim of this PhD thesis is to enrich decision theory such that it includes counterfactual prospects in the domains of desirability (or utility) functions, and show that, as a result, the paradoxes in question disappear.
Before discussing the way in which counterfactual propositions influence the desirability of actual outcomes, I discuss the way in which the truth of one factual proposition influences the desirability of another. This examination leads me to reject the Invariance assumption, which states that the desirability of a proposition is independent of whether it is true. The assumption plays an important role in David Lewis’ famous arguments against the so-called Desire-as-Belief thesis (DAB). The unsoundness of Lewis’ argument does of course not make DAB true. In fact, I provide novel arguments against different versions of DAB, without
assuming Invariance.
To justify the assumptions I make when extending decision theory to counterfactual prospects, I discuss several issues concerning the logic, metaphysics and epistemology of counterfactuals. For instance, I defend a version of the so-called Ramsey test, and show that Richard Bradley’s recent Multidimensional Possible World Semantics for Conditionals is both more plausible and permissive than Bradley’s original formulation of it suggested.
I use the multidimensional semantics to extend Richard Jeffrey’s decision theory to counterfactuals, and show that his desirability measure, extended to counterfactuals, can represent the various different ways in which counterfactuals influence the desirability of
factual propositions. And I explain why the most common alternatives to Jeffrey’s theory cannot be similarly extended.
I conclude the thesis by using Jeffrey’s extended decision theory to construct an ethical theory I call Modal Consequentialism, and argue that it better satisfies certain entrenched moral intuitions than Non-Modal Consequentialism (such as classical utilitarianism and welfare economics)
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