Decision under Normative Uncertainty
Economics & Philosophy, Cambridge University Press
23 Pages Posted: 28 Oct 2019 Last revised: 7 Oct 2021
Date Written: 2021
While ordinary decision theory focuses on empirical uncertainty, real decision-makers also face normative uncertainty: uncertainty about value itself. From a purely formal perspective, normative uncertainty is comparable to (Harsanyian or Rawlsian) identity uncertainty in the 'original position', where one's future values are unknown. A comprehensive decision theory must address twofold uncertainty -- normative and empirical. We present a simple model of twofold uncertainty, and show that the most popular decision principle -- maximising expected value ('Expectationalism') -- has different formulations, namely Ex-Ante Expectationalism, Ex-Post Expectationalism, and hybrid theories. These alternative theories recommend different decisions, reasoning modes, and attitudes to risk. But they converge under an interesting (necessary and sufficient) condition.
Keywords: Normative uncertainty, normative vs empirical uncertainty, Harsanyi, Rawls, original position, expected value, ex ante vs ex post criteria
JEL Classification: D8, D9, D46
Suggested Citation: Suggested Citation