June 16, 2017: Jean Bacelli: On Decision-Making with Moral Hazard
Jean Bacelli (Munich Centre for Mathematical Philosophy)
On Decision-Making with Moral Hazard
Friday 16 June, h. 2:30 p.m.
Room Enzo Paci, Directorate of Department of Philosophy, via Festa del Perdono, 7 - Milan
Assume that you can observe the betting behavior of a given decision-maker and that in so doing, your goal is to identify the beliefs which he holds about the likelihood of the events on which he is betting. Assume further that, by some actions which you cannot observe, the decision-maker can influence the intrinsic likelihood of these events. This raises a distinctive obstacle to the identification of beliefs, which is best-known as the “problem of moral hazard”. In my presentation, I will investigate the problem of moral hazard in the canonical decision-theoretic framework of Savage. I will find myself fighting on two fronts. On the one hand, many (e.g. most contributors to so-called “causal decision theory”) deny that it makes any sense to investigate moral hazard in Savage's framework. I will show that it makes perfect sense, and that a simple form of moral hazard even proves closely related to one of the most well-known models in decision theory, i.e. the so-called “max-min expected utility” model. On the other hand, some (namely, the rare decision theorists that have previously investigated moral hazard in non-Savagian frameworks) claim that moral hazard eschews the identification issues raised by so-called “state-dependent utility”. State-dependent utility describes the fact that the preferences of a decision-maker can vary with the events on which he is betting, in ways unrelated to, but impeding the identification of, his beliefs about the respective likelihoods of these events. I will show that, in Savage's framework, moral hazard does not eschew the identification issues raised by state-dependent utility, and that major qualifications must be added to the identification results previously presented in non-Savagian frameworks.
The talk will be held in English.
Participation is strongly recommended to students of the Doctoral School in Philosophy and Human Sciences.
Attendance is free. All welcome.