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Risk and Rationality$
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Lara Buchak

Print publication date: 2013

Print ISBN-13: 9780199672165

Published to Oxford Scholarship Online: April 2014

DOI: 10.1093/acprof:oso/9780199672165.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 28 September 2021

Bookmaking and Packaging

Bookmaking and Packaging

(p.201) 7Bookmaking and Packaging
Risk and Rationality

Lara Buchak

Oxford University Press

This chapter considers two arguments against risk-weighted expected utility theory that each involve choice in multi-decision scenarios. The first argument is a version of the classic “Dutch book” argument that betting quotients ought to be additive on pain of vulnerability to sure loss. The second argument considers how agents who conform to risk-weighted expected utility theory fare in the long-run. A case is made that neither of these arguments succeeds; nonetheless, they both show us something important about how rational agents who are globally sensitive approach multi-decision scenarios. The phenomenon of purchasing insurance is also considered. Finally, the chapter discusses the relationship between a rational individual’s preferences in choice situations described so as to include everything she cares about and her preferences in more tractable decision problems.

Keywords:   Dutch books, long-run, multi-decision scenarios, insurance, risk-weighted expected utility

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