On the (In)Plausibility of Dutch Book Arguments for the Rationality of Beliefs

Phoebe Koundouri (), Nikitas Pittis () and Panagiotis Samartzis
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Nikitas Pittis: University of Piraeus, Greece

No 2306, DEOS Working Papers from Athens University of Economics and Business

Abstract: Economic rationality demands the decision maker (DM)'s degrees of beliefs to be coherent, that is to obey the rules of probability calculus. This view is usually referred to as Probabilism. Among the various justifications of Probabilism, the Dutch Book Argument (DBA) occupies a prominent place. DBA purports to show that DM's aversion to sure financial losses is sufficient to ensure that her beliefs are coherent. A tacit assumption of DBA is that DM is capable to implement a heuristic error-correction process, ECC, that yields rational beliefs. The main aim of this paper is to challenge this assumption. In order for DBA to be convincing, ECC must empower DM to detect each and every Dutch Book that may be made against her, no matter how complex this Book turns out to be. A complex Dutch book is one that requires very sophisticated calculations before its financial consequences are deduced. In the presence of complex Dutch Books, the only point that DBA makes clear is that DM has to be 'computational omnipotent' on pain of incoherence.

JEL-codes: C44 D81 D83 D89 (search for similar items in EconPapers)
Date: 2023-02-20
New Economics Papers: this item is included in nep-hpe and nep-mic
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