Risk and Rationality

Lara Buchak sets out an original account of the principles that govern rational decision-making in the face of risk. A distinctive feature of these decisions is that individuals are forced to consider how their choices will turn out under various circumstances, and decide how to trade off the possibility that a choice will turn out well against the possibility that it will turn out poorly. The orthodox view is that there is only one acceptable way to do this: rational individuals must maximize expected utility. Buchak's contention, however, is that the orthodox theory (expected utility theory) dictates an overly narrow way in which considerations about risk can play a role in an individual's choices. Combining research from economics and philosophy, she argues for an alternative, more permissive, theory of decision-making: one that allows individuals to pay special attention to the worst-case or best-case scenario (among other 'global features' of gambles). This theory, risk-weighted expected utility theory, better captures the preferences of actual decision-makers. Furthermore, it isolates the distinct roles that beliefs, desires, and risk-attitudes play in decision-making. Finally, contra the orthodox view, Buchak argues that decision-makers whose preferences can be captured by risk-weighted expected utility theory are rational. Thus, Risk and Rationality is in many ways a vindication of the ordinary decision-maker--particularly his or her attitude towards risk--from the point of view of even ideal rationality.

Lara Buchak is an Assistant Professor in the Department of Philosophy at UC Berkeley. She received her AB from Harvard College in philosophy and mathematics in 2003, and her PhD in philosophy from Princeton University in 2009. Her primary research is in decision-making, particularly decision-making in the face of risk. She also has interests in epistemology, in philosophy of religion, and in social choice theory. Some topics she has written on include when and why one ought to stop looking for more evidence and make a decision; what is the nature of faith, both in the religious and the more mundane sense; and what is the relationship between assigning probability to a hypothesis and outright believing that hypothesis.