Facts, Norms and Expected Utility Functions

Sophie Jallais (), Pierre-Charles Pradier and David Teira ()
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Sophie Jallais: PHARE - Pôle d'Histoire de l'Analyse et des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne
David Teira: Dpto. de Lógica, Historia y Filosofía de la ciencia. UNED - UNED - Universidad Nacional de Educación a Distancia

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Abstract: In this paper we want to explore an argumentative pattern that provides a normative justification for expected utility functions grounded on empirical evidence, showing how it worked in three different episodes of their development. The argument claims that we should prudentially maximize our expected utility since this is the criterion effectively applied by those who are considered wisest in making risky choices (be it gamblers or businessmen). Yet, to justify the adoption of this rule, it should be proven that this is empirically true: i.e., that a given function allows us to predict the choices of that particular class of agents. We show how expected utility functions were introduced and contested in accordance to this pattern in the 18th century and how it recurred in the 1950s when M. Allais made his case against the neobernoullians.

Keywords: Expected utility; Normative theory (search for similar items in EconPapers)
Date: 2008-05
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00274361
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Published in History of the Human Sciences, 2008, 21 (2), pp.45-62. ⟨10.1177/0952695108091414⟩

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Working Paper: Facts, Norms and Expected Utility Functions (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00274361

DOI: 10.1177/0952695108091414

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