Rational Choice

Normative interpretations of classical decision theory are supposed to show how people should behave. A rational person, in this view, will take the action with the highest expected probability.

Arguments for normative interpretations.

Many arguments for the claim that decision theory is a good normative model for decision making portray irrationality as self-subversion. If an agent violates the theory, he will, over the long run, act in ways that undermine his very own desires. For example, if someone's subjective probabilities do not conform to probability theory, he will be susceptible to "Dutch book" (a series of bets he is guaranteed to lose, no matter how things turn out).

Objections and replies.

It has been pointed out that Dutch book arguments and their kin rely on unrealistic assumptions and that there are other ways to avoid self-subversion besides conforming to classical decision theory. There is also a problem suggested by difficulties that beset empirical interpretations. Utility maximization cannot be an appropriate prescription if one lacks the cognitive capacities to follow it. One reply to these criticisms is that even if researchers fall short of classical decision theory's guidelines, rationality requires that is is necessary to get as close to them as possible.

Another criticism is that some of the principles of the classical theory do not make sense as normative guidelines. For instance, they would enjoin people to prefer a chance at something with a high payoff to a smaller guaranteed payoff where the former had a higher expected utility, but it often seems quite rational to prefer the sure thing. Cases like this are intended to show that rationality does not always require utility maximization. Advocates of the classical account counter that intuitive "violations" of the theory often result from simplistic (mis)applications of its principles. These issues remain a matter of controversy.