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6-cx\x\.vv\cxzcnll486-`6 Is expected utility theory a satisfactory
account of individual ratio1111nality?
Individuals (agents) often face situations in which they have to make choices, some of
which they are uncertain of the outcomes. Scholars have over the years have attempted to
understand how individuals make or should make decisions to choices under uncertainty. Among
other theories the decision theory stands out as one of the most notable attempts at understanding
individual choices. There are two approaches to the decision theory, i.e. normative and
descriptive decision theory approaches; the normative decision indicates how individuals should
act and the descriptive decision theory which tries to understand and explain how individuals act.
The theory contends that individual decisions are a product of their desires, preferences and
values. According to the theory, individuals deliberate the best action based on the available
knowledge, facts, expectations and desires to select among choices, each of which have different
possible outcomes, in a process called rationalization(Cite). Therefore, according to the theory,
rationality can be said to entail acting a particular manner after reasoning or some thought
process on the available knowledge and facts. Individuals evaluate the facts of reality with the
notion that they have a cause-effect relationship. As such, they most likely choose to act in ways
whose effects are in line with their desires, values, preferences and prospects. One of the
interpretations of the decision theory is that individual choices are based on the expected utility
of an action to the agent, where agents ought to make decisions aimed maximizing the expected
utility of their actions. This theorem is referred to as the expected utility theory.
According, to the expected utility theory of rationality, individuals make decisions based
on the states, act and outcomes, with outcomes being dependent on the acts and states in context
and states being beyond the agents control (Resnik, 1987). The theory is widely applicable in
many decision-making situations where outcomes are uncertain and it remains a relevant tool for
describing and guiding individual choice under uncertainty. Notwithstanding, decision-making
under uncertainty involves complex elements some of which the expected utility does not
account for. Therefore, as this paper will argue, the expected utility theory is not a satisfactory
account of individual rationality.
 Expected utility theorists hypothesize that individuals should choose actions with the
highest expected utility by assigning numerical values to the expected values of actions to an
individual in an ordinal scale and multiplying those values with their respective probability of
occurring (cite). In this regard, it is important to gain an understanding of the theories concepts
of expected utility. The conception of utility is ambiguous, and even subscribers to the theory
disagree on what it entails (Broome, 10). However, Broome (Cite) indicates, in the theory,
utility should be taken to mean “good.” Theory heralds that outcomes are determined by an
agent’s acts and the states in which such decisions are made. Accordingly, states are conditions
which individual (agents) cannot control while acts actions that an agent can do to influence the
outcomes (Briggs). Putting into account the uncertainty of outcomes, the theory indicates that by
rationalization of facts and states, individuals can come up with a degree of probability of an
outcomes occurrence. Therefore, by compounding the likelihood of an outcomes and its
usefulness to the individual, agents can realize the action with the highest expected utility. For
example one may face a choice on whether to get vaccinated or not, with possible outcomes
being getting infected and not getting infected. According to the theory, the agent should
evaluate the probability of getting infected in consideration of the state. For example, the
presence of a flu outbreak nearby could increase the probability of infection. But according to
expected utility theory, this is not sufficient to make a rational decision. To be rational, agents
should consider the usefulness or utilities of remaining healthy or getting infected and compound
them with their respected probabilities to realize the maximum expected utility of each action.
This notion of expected utility is self-evident in many situations. But states, actions and
outcomes in the real world are sometimes far more complicated. This begs the question as to
whether the expected utility theory can explain individual rationality entirely.
Indeed, agents sometimes make choices with the aim of gaining some form utility, individual
good, happiness, or pleasure. However, in some situations, individuals perform acts that do not
appear to have any expected usefulness or utility to them. Sometimes for example, agents choose
to donate to charity with uncertainty, as to whether the money will reach the needy without the
expectation of utility (Gee, 2015, p. 4). Colyvan, Cox, and Steele (2010, p. 504-505) further fault
the theory by indicating that the Kolmogorov-consistency and von-Neumann-Morgenstern
axioms which ensure consistency in probability and the transitivity of preferences respectively
does not guarantee that an agents choice is rational. As an example they indicate that by
assigning probabilities to outcomes with disregard of the available information or evidence
makes amounts to epistemological irresponsibility. They add that the theory odes not fully
account for ethical decision-making as conforming to its principles does not guarantee ethical
rationality. This is because classical expected utility theory suggests that even actions that are
largely considered intrinsically immoral can be morally sound if they result in the maximum
expected welfare for the greatest number of individuals (Broome, 1995). As such, they suggest
ta review of the theory to ensure applicability to ethical and epistemological decision model.
Consequently on ethics, utilitarian have come up with another approach to ethical
decisions indicating that for agents to be rationally moral, their decisions should be such that
they maximize a welfare-tracking utility such as good and happiness to the greatest
number(Colyvan, Cox, and Steele, 2010, p.507). However as Gee (cite) indicates, this would
involve considering the summation of welfare-tracking utilities of others to realize expected
utility. To him, doing so is counter-intuitive because one’s own good supersedes that of others as
only the agent can experience it. As such since the agent cannot experience others’ happiness
they have no motivation to acting in their interests. Given the fact that agents have diverse
conceptions of what good and welfare entail, the utility of an action is agent-specific, thus
calculating the expected utility would be impossible.
The expected utility theory holds that preferences should be independent of the opinions
that agents have on that outcome. For example, given to alternatives with equal probability of
occurring, the agents’ assessment of the alternatives should be independent of agents’ beliefs on
that outcome (Briggs, 2014). As Buchak (2016, p. 810) indicates, the expected utility theory
considers the anticipation of utility while ignoring other aspects of choice under uncertainty such
as the minimum utility value or variance and the maximum utility value. She adds that other
aspects of decisions should be added, citing Maurice Allais contention that agents are not only
interested in the average utility of an action but also its inconsistency and skewness. H
Prescriptively, the expected utility theory suggests that individual should take actions whose
utilities dominate/are greater than others’ (Resnik). However the theory fails in that I does not
account for the fact that at times, “the act we choose affects the probabilities of the states.” As
an example, Resnik (1987) indicates that in state-state confrontation, one nation’s disarming
could increase the probability of the other attack while arming would reduce the likelihood of
war. Therefore 3
 In line with the theory’s notion that agents act depending on the expected utility/good
/preference, the theory unsatisfactory in that while it postulates that

Notwithstanding, the expected utility theory of rationality remains relevant in society as it

forms basis of normative action whereby agents, actions are be evaluated in consideration of the
rationalization of expected outcomes in regard to the sates in context. As such the theory is
prescriptive of hoe individuals should act. In recognition of this, agents in the society often use
the expected utility concept as a guide to making choices during uncertainty. Furthermore, the
theory is instrumental in predicting, interpreting individual actions in society. (Cite buchak)
Therefore, while the theory fails in explaining behaviors in all concepts, it is satisfactory in
accounting to individual behavior in other contexts.
References

Gee, Max. "Rationality and Expected Utility." PhD diss., UC Berkeley, 2015.
Resnik, Michael D. Choices: An introduction to decision theory. U of Minnesota Press, 1987.

Briggs, Rachael. "Normative theories of rational choice: Expected utility." (2014).

Broome, John. "Utility." Economics & Philosophy 7, no. 1 (1991): 1-12.

Colyvan, M., Cox, D. and Steele, K., 2010. Modelling the moral dimension of
decisions. Noûs, 44(3), pp.503-529.
Lee-Stronach, C., 2018. Morality Under Risk.