Do Violations of the Axioms of Expected Utility Theory Threaten Decision Analysis?

Robert F. Nease

Medical Decision Making, 1996, vol. 16, issue 4, 399-403

Abstract: Research demonstrates that people violate the independence principle of expected utility theory, raising the question of whether expected utility theory is normative for medical decision making. The author provides three arguments that violations of the independence principle are less problematic than they might first appear. First, the independence principle follows from other more fundamental axioms whose appeal may be more readily apparent than that of the independence principle. Second, the axioms need not be descriptive to be normative, and they need not be attractive to all decision makers for expected utility theory to be useful for some. Finally, by providing a metaphor of decision analysis as a conversation between the actual decision maker and a model decision maker, the author argues that expected utility theory need not be purely normative for decision analysis to be useful. In short, violations of the in dependence principle do not necessarily represent direct violations of the axioms of expected utility theory; behavioral violations of the axioms of expected utility theory do not necessarily imply that decision analysis is not normative; and full normativeness is not necessary for decision analysis to generate valuable insights. Key words: ex pected utility theory; independence axiom; decision analysis; normativeness. (Med De cis Making 1996;16:399-403)

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:16:y:1996:i:4:p:399-403

DOI: 10.1177/0272989X9601600410

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