INST 354 Lecture 7: INST354 Lecture 7: Quality of Choice
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INST354 Lecture 7: Quality of Choice
If we aspire to give advice about how to make good decisions, we need to say something about
what we mean by bad decisions. The quality of a decision cannot be determined unambiguously
by its outcome. For example, most of us believe it would be foolish to accept an “even money”
bet that the next time we throw a pair of dice we will roll “snake eyes.” (The actual chance of
throwing two ones, “snake eyes,” is 1/36). Moreover, we would regard the person who accepted
such a wager as a poor decision maker—even if he or she happened to roll snake eyes. On the
other hand, if that person were in danger of physical harm or death at the hands of a loan shark,
and that wager were the only way to raise enough money to avoid harm, then the person might
not seem so foolish. What this example illustrates is that it is the potential outcomes, their
probabilities, and their values to the decision maker at the time the decision is made that lead us
to judge a particular choice to be wise or foolish. A general who is losing a war, for example, is
much wiser to engage in a high-risk military venture than is a general who is winning a war. The
failure of such a venture might not reflect unfavorably on the decision-making ability of the
losing general; it is more “rational” for the losing general to take a risk.
So what is rationality? Often the term is used in a purely egocentric, evaluative sense:
“Decisions I make are ‘rational’; those of which I disapprove are not.” Occasionally, we adopt a
broader perspective, and judge rationality not just in terms of approval but in terms of the “best
interests” of the person making the decision—although with “best interests” still defined
egocentrically by us. As we said at the outset, good decisions are those that choose means,
available in the circumstances, to achieve the decision maker’s goals. Thus, for example, some
of Adolf Hitler’s decisions may be viewed as rational (and others as irrational), despite the fact
that we disapprove of all of them.
In this book, rationality has a narrow technical meaning; it will nevertheless provide the
criterion by which we will judge the wisdom of choices. A rational choice can be defined as one
that meets four criteria:
1. It is based on the decision maker’s current assets. Assets
include not only money, but also physiological state,
psychological capacities, social relationships, and feelings.
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