糖心TV

The principle of maximizing expected utility or choiceworthiness is intuitively plausible in many ordinary cases of decision-making under risk. But it is less plausible in cases of extreme, low-probability risk (like "Pascal's Mugging"), and intolerably paradoxical in cases like the St. Petersburg and Pasadena games. In this paper I show that, under certain conditions, first-order stochastic dominance reasoning can capture most of the plausible implications of expectational reasoning while avoiding most of its pitfalls. Specifically, in the presence of sufficient background risk (with exponential-or-heavier tails and a large scale factor), many expectation-maximizing gambles become first-order stochastically dominant. But, even under these conditions, stochastic dominance will not require agents to accept options whose expectational superiority depends on sufficiently small probabilities of extreme payoffs. The sort of background risk on which these results depend looks unavoidable for any agent who measures the choiceworthiness of her options at least in part by the total amount of value in the resulting world. At least for such agents, then, stochastic dominance offers a plausible general principle of choice under risk that can explain more of the apparent rational constraints on such choices than has previously been recognized.