Risk Theory: Rational Decision in the Face of Chance, Uncertainty, and Risk (SpringerBriefs in Philosophy) 3030785017, 9783030785017

Citation preview

SPRINGER BRIEFS IN PHILOSOPHY

Nicholas Rescher

Risk Theory Rational Decision in the Face of Chance, Uncertainty, and Risk

123

SpringerBriefs in Philosophy

SpringerBriefs present concise summaries of cutting-edge research and practical applications across a wide spectrum of fields. Featuring compact volumes of 50 to 125 pages, the series covers a range of content from professional to academic. Typical topics might include: • A timely report of state-of-the art analytical techniques • A bridge between new research results, as published in journal articles, and a contextual literature review • A snapshot of a hot or emerging topic • An in-depth case study or clinical example • A presentation of core concepts that students must understand in order to make independent contributions SpringerBriefs in Philosophy cover a broad range of philosophical fields including: Philosophy of Science, Logic, Non-Western Thinking and Western Philosophy. We also consider biographies, full or partial, of key thinkers and pioneers. SpringerBriefs are characterized by fast, global electronic dissemination, standard publishing contracts, standardized manuscript preparation and formatting guidelines, and expedited production schedules. Both solicited and unsolicited manuscripts are considered for publication in the SpringerBriefs in Philosophy series. Potential authors are warmly invited to complete and submit the Briefs Author Proposal form. All projects will be submitted to editorial review by external advisors. SpringerBriefs are characterized by expedited production schedules with the aim for publication 8 to 12 weeks after acceptance and fast, global electronic dissemination through our online platform SpringerLink. The standard concise author contracts guarantee that • an individual ISBN is assigned to each manuscript • each manuscript is copyrighted in the name of the author • the author retains the right to post the pre-publication version on his/her website or that of his/her institution. More information about this series at http://www.springer.com/series/10082

Nicholas Rescher

Risk Theory Rational Decision in the Face of Chance, Uncertainty, and Risk

Nicholas Rescher University of Pittsburgh Pittsburgh, PA, USA

ISSN 2211-4548     ISSN 2211-4556 (electronic) SpringerBriefs in Philosophy ISBN 978-3-030-78501-7    ISBN 978-3-030-78502-4 (eBook) https://doi.org/10.1007/978-3-030-78502-4 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

For Brian Skyrms

Preface

An earlier work of mine—Risk: A Philosophical Introduction (Washington, D.C., University Press of America. 1983)—discussed some of the conceptual and philosophical aspects of risk-taking. At present, however, it is the metric and mathematical dimension of the analysis and management that is at the foreground. Taxonomically deliberation about risk belongs to what has come to be called rational decision theory. But this has developed in a way that deals primarily with special cases and tends to neglect general principles. The present book, by contrast, will focus on the nature and the rationale of the basic general principles at work in risk theorizing and management. In its focus on fundamentals the book tries to bridge two gaps: that between subjectivity and objectivity and that between general principles and concrete application. Apart from its foray into technical issues the book has one principal aim. With situations of chancy outcomes certain key factors—including outcome possibilities, overall expectation, threat, and even luck—are measurable parameters. But risk is something different: it is not measurable a single parametric quantity, but a many-­ sided factor that has several different components, and constitutes a complex phenomenon that must be assessed judgmentally in a highly contextualized way. I am grateful to Estelle Burris for her invaluable aid in putting this book into shape for publication amidst the difficulties and hazards a coronavirus epidemic. Pittsburgh PA March 2021

Nicholas Rescher

vii

Introduction

Like it or not, risks pervade human life. Generally speaking, we do well to avert them where we can and manage them wherever we cannot. And there is basically only one reason why reasonable people could ever choose to run risks, namely to engage a chancy situation that offers a predominant potential of benefit. And this renders risk assessment a central and indispensable facet of rational deliberation. Thanks to the unrestricted range of their applicability, the basic general principles that characterize rational endeavor in any sphere of activity are bound to be rather obvious and common-sensual. Risk management is no different in this regard, and its basics are correspondingly straightforward: • Always calculate risks: Carefully asses all the relevant parameters. • Insofar as possible, avert unacceptably costly risks. • Insofar as possible, make risks pay for themselves by compensating promise. And the last of these has the crucial corollary: • Never run pointless (let alone needless) risks. By their very nature as fundamentals these principles are—and should be—pretty obvious. The aim of Risk Theory is not to teach them to us, but to teach us how to apply them. The crux lies in the details: in how to understand and implement those pivotal conceptions: relevant parameters, unacceptable visits, and compensating promise. The definitive mission of Risk Theory is not to articulate the general principles of risk management but to indicate and elucidate their application and implementation.

ix

Glossary of Symbols

S1, S2, S3, . . . chancy situations. O1, O2, O3, . . . outcomes of chancy situations. pr{Oi} or pi: probability of the chancy outcome Oi. |Oi|: value or yield of the chancy situation Oi. |O+| and |O−|: the maximal and minimal outcome-yields. ∈: a negligibly small probability. +∞ and −∞: a limitlessly large (respectively negative) outcome-yield. ?: an unknown quantity. |O+| − |O−| = Δ: the stake of the situation. |O+| − |O| : the disappointment score of the outcome O. |O| − |O−|: the relief score of the outcome O. E{S}: the expected value of situation S: E{S} = ∑ (pr{Oi} × |Oi|). i E+{S} and E−{S}: the positive (respectively, negative) sub-expectation of the situation S comprising all of its positive (respectively negative) factors. E{S} − |O−|: the regret score of the situation. R{S} = E−{S} = Σ=(pi × |Oi|) the categorical risk of the situation (i.e., the negative sector of the expectation). R*{S}: the relative risk of the situation (i.e., E− ÷ (E+ − E−). θ+{S} and θ−{S}: the sum total of the probabilities of the positive (respectively negative) outcome yields of the situation S.

xi

Contents

Glossary of Symbols�����������������������������������������������������������������������������������������   xi 1 Choice and Risk�����������������������������������������������������������������������������������������   1 2 Chance and Likelihood������������������������������������������������������������������������������   5 3 Outcome-Yield Evaluation and Risk��������������������������������������������������������  11 4 Abnormal Situations and Eccentric Measurements ������������������������������  17 4.1 Negligible Probabilities and Dismissible Possibilities ����������������������  17 4.2 Unacceptable Risks and Utter Catastrophes ��������������������������������������  19 4.3 Matters of Policy��������������������������������������������������������������������������������  21 5 Situation Evaluation and Expectation ����������������������������������������������������  23 6 Uncertainty ������������������������������������������������������������������������������������������������  31 7 Risk Assessment ����������������������������������������������������������������������������������������  37 8 Comparing Chancy Situations via Risk and Promise����������������������������  45 9 Managing Risk and Uncertainty��������������������������������������������������������������  51 10 The Social Aspect of Risk��������������������������������������������������������������������������  59 10.1 Technological Risk����������������������������������������������������������������������������  59 10.2 Risk and the Law������������������������������������������������������������������������������  61 10.3 The “Nanny State”����������������������������������������������������������������������������  62 10.4 Conclusion����������������������������������������������������������������������������������������  63 Appendixes����������������������������������������������������������������������������������������������������������  67 Bibliography ������������������������������������������������������������������������������������������������������  75 Index��������������������������������������������������������������������������������������������������������������������  79

xiii

Chapter 1

Choice and Risk

Risk is the chancing of negativity—of some loss or harm. To take a risk is to resolve one’s act-choices in a way that creates or enhances the chance of an unfortunate eventuation, rendering the occurrences of something unwanted more likely. And to be at risk is to be so circumstanced that something unpleasant might happen, some misfortune occur. Risk is correlative with the chance of a mishap—and it exists whenever there are probabilistically indeterminate outcomes some of which are of negative character. Risks face us with the possibility that something untoward may occur, leaving us unable to foretell any specific outcome with categorical assurance. Risk is an ineliminable part of human life. We are vulnerable creatures, leading our lives within a sea of risks that surrounds us on every side. The very environment we inhabit confronts us with major risks,1 and so does virtually every action choice we make. From the moment we gain a foothold on life, we have something to lose. The question in human action is never the indefinite one of whether to accept risk or not-the answer here is a foregone conclusion. At most—and infrequently at that—the question can only be whether to accept this risk or that one. Action generally involves balancing one risk off against another, of chancing one hazard or another. Choice is prominent and pervasive in our lives, and is closely bound up with risk. We constantly have to decide chancy alternatives, activities, contacts, procedures and policies all of which can eventuate contingently and create conditions where things can go wrong. To choose sensibly we need to have information regarding the 1  The literature of the subject is vast. See Gilbert F. White (ed.) Natural Hazards (New York: Oxford University Press, 1974); Ian Burton et. al., The Environment as Hazard (New York: Oxford University Press 1978); Eric Ashby, Reconciling Man with the Environment (Stanford: Stanford University Press, 1978); and R. W. Kates, Risk Assessment of Environmental Hazard (New York: John Wiley & Sons, 1978). And more recently Paul P. Calow, Handbook of Environmental Risk Assessment ad Management (Oxford: Blackwell, 1998); and Rao Kolluru, et. al., Risk Assessment and Management Handbook for Environmental, Health and Safety Professionals (New York: McGraw Hill, 1996).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Rescher, Risk Theory, SpringerBriefs in Philosophy, https://doi.org/10.1007/978-3-030-78502-4_1

1

2

1  Choice and Risk

results or at least likely results of our choices. Choice is intimately linked to risk, and is—or should be—a quintessentially rational proceeding governed by a concern for the risks involved with its outcomes and results. Some choices are welcome and others are not. Some are options brought into being by our own efforts (e.g., whether to order one menu item or another at a restaurant). Others are not options of our own making but thrust upon us by the machinations of circumstance (e.g., whether to use our insufficient funds to pay our debt to Peter or that Paul.) It is a prime task of practical rationality is to address such issues in a way that is sensible and appropriate. For a person’s rationality is manifested in the quality of that individual’s choices.

∗∗∗

The theory of risk evaluation and management is a department of a wider theory of rationality in choice and action. In particular, it belongs to the domain known as practical reasoning, whose object is the rational choice of courses of conduct. The risks it poses are clearly one of the salient features of such a choice. The options that figures in choice can be either real or merely apparent. It may seem to be an option for me to open the window, but if the window is nailed shut this option is not really available. Sometimes an option is actually available but the decider may be unaware of this. (He may think the door locked where it is actually not.) But be this as it may, decisions have to be made among the apparent alternatives. The decisions people make have to issue from the lines of thought available to them. One cannot reason from premisses one does not have, however true they may be. In deliberating about choices one can only deal with those that are apparent to oneself. In actual practice we generally simply prove that the range of options is realistic and that its alternatives are envisioned appropriately and correctly.

∗∗∗

In deliberating about our choices we confront three main questions: (1) What is the range of options: what are the possibilities that present themselves to us as available alternatives? (2) What will be the outcomes of our choices actually or likely be? (3) What are the pluses and minuses, the benefits and deficit that these outcomes will carry in their wake? These are the decisive choice-correlative factors with which any sensible theory of rational theory will have to preoccupy itself. Choice is a matter of deciding among alternative options confronting us as a “branching point” that constitutes a fork in the road of occurrence. This can be graphically presented as follows Option 1 Option 2 Option 3

1  Choice and Risk

3

The spectrum of available alternatives constitutes a “range of options.” It need not indicate all the actual possibilities; there may be options the agent is not aware of, and which accordingly are not really prospects for his selection. Specifying the range of options in matters of differential outcome can be very problematic. Thus on first view the choice may be between going to the ball-game or not. But that alternative NOT is simply a doorway to what then? Read a book? See a play? Clean the house? In actual fact one cannot simply just do NOT. The actual alternative range is more complex than that. Even the simplest and most commonplace of all choices suffice to illustrate the fundamental principles at issue in choosing. The theory of rational choice need seldom look behind prosaic everyday examples.

∗∗∗

Some choices are free and open. One can read any book from the library that one chooses. Other choices are forced, circumstantially necessitated and inevitable. An apparent option may not actually be available. (Leaving the room may look to be an option, when in fact the door may be locked.) One can choose when to breathe but not whether to do so. The object of a choice may be a definite item (a shoe, a book, a menu selection, a proper moment) or it may be one or another of an as-yet indeterminate group of possibilities (as one’s vote-candidate may or may not succeed, or one’s horserace bet may or may not pay off). Either way, to proceed sensibly we must be able to assess the options. Outcome evaluation is an indispensable requisite for rational choice. Choices often open the door to further choice. When you decide to go for a walk the issue is still as whether to carry in your umbrella, so that there yet remains the further choice whether • go walking with an umbrella • go walking without an umbrella In this regard a mere decision to go walking remains stochastically incomplete. Most choices have subsidiary components in which absence they remain indeterminate with subordinary components still awaiting resolution.

∗∗∗

Rational choice theory proceeds on the (often unrealistic) presupposition that choices among alternative options are generally made entirely “on the merits,” solely with a view of the real and best interests of choice-makers as a rational agent. Granted this is not altogether realistic “true to life.” In actuality our choices are often made not on our own theoretical best interest but to please others or to avoid difficulties or to suit the outcomes of the moment. But from a normative point of view this sort of thing can be aside, and rational decision theory becomes committed to idealizations and becomes a normative (rather that strictly descriptive) proceeding. Its concern bears not on the sociological phenomenology of how people decide but on the normative assessment of appropriate procedures.

4



1  Choice and Risk

∗∗∗

Choices can be imposed upon us by circumstances beyond our control. But how and what we actually choose is up to us: In choosing we ourselves are in complete control, it being a matter of our choice that is at issue. However, the outcome that results from our choice is very much something else again. Thus whether we take the umbrella or leave it home is up to us. But if we take it, then whether we do so in vain (with no rain) or to good avail (with rain) is not up to us at all. This result is in “the lap of the gods.” We make choices on the basis of envisioned outcomes and we may or may not be correct about that. Choices differs in quality—they can be better or worse. And this is two distinct senses—namely in point of process or grounding and in point of product or results. Unfortunately, life being what it is the two are not inexorably coordinated. The better reasoned choice need not always yield the best result. All we can do in this regard it to adopt the fiction that the best research choice will issue in the best outcome. This is certainly not true in instantiable detail. But it can reasonably be expected to hold in the long run. And the mission of rational choice theory is to facilitate identification of the best and most promising choices. Rational decision theory with regard to choice thus functions in the borderland between fact and idealization. Neither does it deal with a totally idealized situation wholly apart from what agents are able to realize, nor yet does it deal with the actual idiosyncrasies of individuals and the fictitious idiosyncrasies of their actual position. The resolutions it seeks are neither purely ideal nor yet altogether realistic. These address what sensible people would and should do if they are proceeding reasonably in the agent’s responsibly managed circumstance. The question is what a sensible agent would do in the circumstances. Granted, there is in general no unqualified assurance that doing the sensible thing will actually yield the desired—let alone optimal—results. But choosing rightly is not necessarily choosing the best. And this opens up a potential gap between doing what is right and doing something rightly. After all, there is no assurance that the best we can do in the circumstances is good enough and that our best efforts will be availing—that doing the sensible thing ensures good results. Almost invariably, deliberation only tends and probabilizes, it does not guarantee success. And yet we can do no better than our best. And exactly in this “fact of life” lies the presence and prominence of risk. Avoidance of negativity and seeking for positivity are the guiding principles of choice. And managing the pursuit of these objectives amidst the uncertainties of an unpredictable world is the characterizing taks of the theory of rational decision is to elucidate the principles at work in addressing—and, where possible, resolving— such choice situations in a reasonable way that takes appropriate account of the risks and benefits involved. Its mission is to clarify the considerations that must be brought to bear in determining and implementing the rational appropriateness of choice. Clarifying the issues that arise here will be the present book’s principal object.

Chapter 2

Chance and Likelihood

Our dealings with reality often face forks in the road, branching points where—for ought one can tell—matters can eventuate one way or another. Will it rain or not? Will the dam hold? Will Smith’s preferred horse win the race? Will John propose to Mary? Throughout our concerns such questions about alternatives abound. Chance is reality’s version of choice. With choice we deem ourselves positioned to select among different options, with chance reality itself is seen as having the prospect of providing any one of different outcome-realizations. And there is an interplay between choice and chance. At the track I can place my bet either on “Lightning” or on “Meander.” But when I do this I may be backing the horse that comes in first, or second, or . . . last. The first part is up to me, the second part of it is up to Reality. When I select a novel from that shelf I may be picking what proves to be a well-deserved favorite or a crashing bore, but that outcome of my choice is also not up to me. A chancy situation is a condition of affairs where there are several alternative outcomes with corresponding results ensuing for the stakeholders involved. Thus when you buy a raffle ticket, this may results in a win or in a loss; when you invite multiple people, any combination of them may actually accept and eventually cross your threshold, and with a garden party, it may or may not rain on that day. All these are matters subject to chance, and in such matters there is almost bound to be a discrepancy between what one expects and what will actually happen. And throughout the whole manifold of chancy situations we run the risk that developments may not eventuate as we would like.

∗∗∗

Among the various possible outcomes of a chancy situation, some are generally more probable and more portentous than others. In throwing a die, getting an even number of points is more likely than getting a one. In entering the house of a new Canadian acquaintance, you are more likely to encounter a dog than an alpaca. To © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Rescher, Risk Theory, SpringerBriefs in Philosophy, https://doi.org/10.1007/978-3-030-78502-4_2

5

6

2  Chance and Likelihood

reason about matters of choice we do and must turn to probabilities and likelihoods and in reasoning about otherwise unpredictable alternatives, assessing probabilities is crucial. The crucial consideration for present purposes is that in matters of chance a secure and certain determination of outcomes is in principle impossible. Accordingly a recourse to probabilities—as best this can be managed—becomes a not merely useful but unavoidably indispensable resource. For without assessing the likelihood of alternative occurrences and their consequences no sensible decision and choices about chancy matters can ever be made. Our reasoning about all such uncertain matters are based on the evaluations of probabilities. As Bishop Joseph Butler famously remarked, “Probability is the guide of life.” And even with certainties like death (but when?) and taxes (but how much?) we have to manage affair by means of probabilities.

∗∗∗

Chance pivots on there being alternative outcomes. And these are likely to different in merit. For alternatives are not created equal; while all will be possible some will be lucky and others unlucky, some promising and others not, some probable and some improbable. All too often, life presents us with chancy situations where we face choices where outcomes are not securely predictable but can only be viewed in the light of probabilities. The outcome of a chancy situation is a mere contingency, as such dependent on how things actually work out in a substantially unpredictable world, something by no means assured and certain but rather a matter of likelihood and probability. These probabilities fall into a range traditionally represented by quantities ranging from 0 to 1, indicative of increasing likelihood as per the spectrum set out in Fig. 2.1. Interrelating these conditions by means of computation in the world of the Calculus of Probability. Fig. 2.1  Numerical and descriptive likelihoods

Probability

Likelihood Assessment

0

effectively impossible

< .01

extremely unlikely

> .01 & < .25

very unlikely

> .25 & < .45

unlikely

> .45 & < .55

a toss-up

> .55 & < .75

likely

> .75 & < .99

very likely

> .99 & ? If A estimates that B’s confession-­ 3 1 probability p exceeds , A is inclined not to confess, while if A judges otherwise he 3

72

Appendixes

Fig. A2.4  The expected result for a (in years of incarceration) 1 Note: The top expectation is bound to be bigger as long as 3p – 1 > 0 or equivalently p > . 3

himself will prefer confession. The one range being twice the other, A is ____ to __ it and will opt for non-confession, And with B in exactly the same boat he too will likely opt for nonconfession. And so this variant approach yields the “right” result. The situation for A is as follows. And B faces the mirror image.

NOTE: Here p represents the prisoner’s assessment of the probability that his accomplice will turn state’s evidence and confess. Observe that the expectation for the top option is bound to be larger than that of the bottom option.

There is, moreover, yet another different way of looking at the matter. For A might reason as follows: Let us suppose that the problem has a rational resolution—which, after all, is what is being asked for. Since my opponent is in exactly the same position as I myself, this will have to be identical for the two of us. So both of us will act exactly alike. But this leaves only the two diagonal-positioned possibilities, of which not confessing is obviously the superior.

This perspective too looks altogether sensible. After all, since both are in exactly the same boat, the situation is completely symmetric. So by rationality both are going to have to act alike. In the circumstances mutual nonconfession is the optimal resolution of the problem. The orthodox solution is not, however, actually paradoxical. The explanation for this seeming anomaly is straightforward. The crux is that neither party knows what the other is going to do. Both operate under considerations

Appendixes

73

of substantial uncertainty. And here the outcome uncertainty produced by not knowing how the opponent will act—is almost certain to exact a price in that decisions made in the light of incomplete information are almost bound to be suboptimal. After all, in any situation of outcome uncertainty play-safe choices should be expected to yield suboptimal outcomes. As stressed above, there is no guarantee that issue-resolution appropriately based on best-available information need be optimal when that information is incomplete in its characterizing of the situation. Bibliography Several societies have journals devoted to risk management issues, in particular: • Risk Management, is an (almost) monthly journal of the Risk and Insurance Management Society (RIMS). • Risk Analysis: An International Journal, is published semi-annually by the Society for Risk Analysis. • Law, Probability, and Risk: An Academic Journal is published quarterly by Oxford Academic. ∗∗∗ The many-faceted literatures of the field includes:

Bibliography

Aldous, David, “On Chance and Unpredictability: Lectures on the Links between Mathematical Probability and the Real World” (lecture notes: https://case.edu/artsci/math/esmeckes/ ussy292d/aldous_2015.pdf, 2015). Allais, Maurice, “Le comportement de l’homme rationnel devant le risque: critique des postulats et axiomes de l’école Américaine,” Econometrica, vol. 21, (1953), pp. 503–546. Arrow, Kenneth J., “Alternative Approaches to the Theory of Choice in Risk-Taking Situations,” Econometrica, vol. 19 (1951), pp. 404–437. —, Aspects of the Theory of Risk-Bearing. Yrjö Jahnsson Lectures (Helsinki: Yrjö Jahnssonin Säätiö, 1965). Borch, Karl H., The Economics of Uncertainty (Princeton: Princeton University Press, 1968). Buchak, Lara, Risk and Rationality (Oxford: Oxford University Press, 2014). Church, Ian M. and Robert J. Hartman, The Routledge Handbook of the Philosophy and Psychology of Luck (New York & London: Routledge, 2019). Cohen, John I. and Mark Hansel, Risk and Gambling: The Study of Subjective Probability (London: Longmans Green, 1956). Ellsberg, Daniel, “Risk, Ambiguity, and the Savage Axioms,” Quarterly Journal of Economics, vol. 75 (1961), pp. 643–669. Fairley, G. W., “Criteria for Evaluating the 'Small' Probability of a Catastrophic Accident from the Marine Transportation of Liquefied Natural Gas” in D. Okrent (ed.), Risk-benefit Methodology and Application: Some Papers Presented at the Engineering Foundation Workshop, Asilomar (Los Angeles: University of California, Department of Energy and Kinetics, UCLA-ENG 7598; 1975). Feller, William, An Introduction to Probability Theory and its Applications (New York: John Wiley and Sons, 1950). Ferretti, M. P., “Risk and Distributive Justice: The Case of Regulating New Technologies,” Science and Engineering Ethics, vol. 16, (2010), pp. 501–515. Fischhoff, Baruch et al., “How Safe is Safe Enough? A Psychometric Study of Attitudes toward Technological Risks and Benefits,” Decision Research Report 76-9 (Eugene, OR: 1976). Fischhoff, Baruch et al., “What Risks are Acceptable?” Environment, vol. 21 (1997), pp. 17–38. Gauthier, D.  P. (ed.), Morality and Rational Self-Interest (Englewood Cliffs, N.J., Prentice Hall, 1970). Gigerenzer, Gerd, Calculated Risks: How to Know When Numbers Deceive You (New York: Simon and Schuster, 2002).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Rescher, Risk Theory, SpringerBriefs in Philosophy, https://doi.org/10.1007/978-3-030-78502-4

75

76

Bibliography

Green, Harold P., “The Role of Law in Determining Acceptability of Risk,” in R.  C. Schwing and W. A. Albert Jr. (eds.), Societal Risk Assessment (New York and London: Plenum, 1980), pp. 255–267. Hacking, Ian, The Emergence of Probability (Cambridge: Cambridge University Press, 1975). Handa, Jagdish, “Risk, Probabilities, and a New Theory of Cardinal Utility,” Journal of Political Economy, vol. 85 (1977), pp. 97–122. Hansson, S. O., “Ethical Criteria of Risk Acceptance,” Erkenntnis, vol. 59 (2003), pp. 291–309. —, “Weighing Risks and Benefits,” Topoi, vol. 23 (2004), pp. 145–152. —, “Economic (ir)Rationality in Risk Analysis,” Economics and Philosophy, vol. 22 (2006), pp. 231–241. —, The Ethics of Risk: Ethical Analysis in an Uncertain World (New York: Palgrave MacMillan, 2013). Harsanyi, John C., “Cardinal Utility in Welfare Economics and in the Theory of Risk-Taking,” Journal of Political Economy, vol. 61 (1953), pp. 434–435. —, “Bayesian Decision Theory, Subjective and Objective Probabilities, and Acceptance of Empirical Hypotheses,” Synthese, vol. 57 (1983), pp. 341–365. Hawthorne, John, Knowledge and Lotteries (Oxford: Oxford University Press, 2004). Hansson, Sven Ove, “Risk,” The Stanford Encyclopedia of Philosophy (Fall 2018 Edition), Edward N. Zalta (ed.), https://plato.stanford.edu/archives/fall2018/entries/risk/ Hay-Gibson, Naomi, “A River of Risk: A Diagram of the History and Historiography of Risk Management,” Interdisciplinary Studies in the Built and Virtual Environment, vol. 1 (2008), 149–158. Jacoby, Oswald, On Gambling (Garden City: Doubleday, 1963.) Jeffrey, Richard C., The Logic of Decision (New York: McGraw-Hill, 1983). Kahneman, Daniel and Amos Tversky “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, vol. 47 (1979), pp. 263–293. Kahnemann, Daniel, Paul Slovic, and Amos Tversky (eds.) Judgment under Uncertainty: Heuristic and Biases (Cambridge: Cambridge University Press, 1982). Kates, Robert W., Risk Assessment of Environmental Hazard (New York: John Wiley & Sons, 1978). Kates, Robert W. (ed.), Managing Technological Hazard: Research Needs and Opportunities (Boulder: Institute of Behavioral Science, University of Colorado; 1977). Kermisch, Câeline, “Risk and Responsibility: A Complex and Evolving Relationship,” Science and Engineering Ethics, vol. 18 (2012), pp. 91–102. Keyes, Ralph, Chancing It: Why We Take Risks (Boston and Toronto: Little Brown, 1985) King, Mervyn A. and J. A. Kay, Radical Uncertainty: Decision-Making for an Unknowable Future (New York: Norton, 2020). Knight, Frank, Risk, Uncertainty, and Profit (Boston, Houghton-Mifflin, 1921). Kyburg, Henry E. Jr., Probability and the Logic of Rational Belief (Middletown, Conn., 1961.) Lowrance, William W., Of Acceptable Risk: Science and the Determination of Safety (Los Altos: Kaufmann, 1976), pp. 75–76. Luce, R. D., and Howard Raiffa, Games and Decisions (New York: Wiley, 1957). Machina, M.D. and M.  Rothschild, “Risk,” in J.  Eatwell, M.  Milgate, and P.  Newman (eds.), The New Palgrave: A Dictionary of Economic Theory and Doctrine (Volume 4) (London and New York: Macmillan and Stockton, 1987), pp. 201–205. Macpherson, J. A. E., “Safety, Risk Acceptability, and Morality,” Science and Engineering Ethics, vol. 14 (2008), pp. 377–390. McKerlie, Dennis, “Rights and Risk,” Canadian Journal of Philosophy, vol. 16 (1986), pp. 239–52. Mlodinow, Leonard, The Drunkard’s Walk: How Randomness Rules Our Lives (Harmondsworth UK: Penguin Books, 2008). National Commission on Product Safety: Final Report (Washington DC: 1970), p. 12–13. von Neumann, John, and Oskar Morgenstern, Games and Decisions (New York: J.  Wiley & Sons, 1944). von Neumann, John, and Oskar Morgenstern, Theory of Games and Economic Behavior (Princeton: Princeton University Press, 1946; 2nd ed. 1953).

Bibliography

77

Oberdiek, John, Imposing Risk: A Normative Framework (Oxford: Oxford University Press, 2014). Pratt, J.  W., “Risk Aversion in the Small and in the Large,” Econometrica, vol. 32, (1964), pp. 122–136. Preston, M. G., and P. Baratta, “An Experimental Study of the Value of an Uncertain Outcome,” American Journal of Psychology, vol. 61 (1948), pp. 183–193. Pritchard, Duncan, “Risk,” Metaphilosophy, vol. 46 (2015), pp. 436–461. Pritchard, Duncan and Lee John Whittington (eds.), The Philosophy of Luck (Oxford: Wiley-­ Blackwell, 2015). Prothero, Donald, “The Holocaust Denier’s Playbook and the Tobacco Smokescreen: Common Threads in the Thinking and Tactics of Denialists and Pseudoscientists,” pp.  341–358  in M. Pigliucci and M. Boudry (eds.), Philosophy of Pseudoscience. Reconsidering the demarcation problem (Chicago: University of Chicago Press, 2013). Rava, Ambor Ahmad, A Normative Account of Risk, (Vancouver, B.C.: University of British Columbia doctoral dissertation, 2004). Rescher, Nicholas, Introduction to Value Theory (Englewood Cliffs: Prentice Hall, 1969). —, Risk (Washington, D.C.: University Press of America, 1983). —, Luck Theory: A Philosophical Introduction of the Mathematics of Luck (Chaim: Springer Verlag, 2021). Rothschild, Michael and Joseph E Stiglitz, “Increasing Risk: 1. A Definition,” Journal of Economic Theory, vol. 2 (1970), pp. 225–243. Schelling, T. C., The Strategy of Conflict (Cambridge, Mass: Cambridge University, 1960). Shrader-Frechette, Kristin, Risk and Rationality. Philosophical Foundations for Populist Reforms (Berkeley: University of California Press, 1991). Simon, Herbert A., Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization, 2nd ed. (New York, 1957). Sjöberg, Laura, “The Methodology of Risk Perception Research,” Quality and Quantity, vol. 34 (2004), pp. 407–418. Slovic, Paul, et al, “Preference for Insuring against Probable Small Losses: Insurance Implications,” The Journal of Risk and Insurance, vol. 44 (1977), pp. 237–258 (see p. 254). Slovic, Paul, Sarah Lichtenstein, and Baruch Fischoff, “Images of Disaster: Perception and Acceptance of Risks from Nuclear Power,” in G. T. Goodman (ed.), Energy Risk Management (London: Academic Press, 1980). Starr, Chauncey, “Social Benefits vs. Technological Risk,” Science, vol. 165 (1969), pp. 1232–38. Taleb, Nassim N., Fooled by Randomness: The Hidden Role of Chance in Life (New York: Random House, 2004). —, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007). Thomson, J. J., “Imposing Risks,” in To Breathe Freely, Mary Gibson (ed.) (Totowa, NJ: Rowman and Allanheld, 1986), pp. 124–140. Tobin, James, “Liquidity Preference as Behavior towards Risk,” Review of Economic Studies vol. 25(1958), pp. 65–86. Todhunter, Isaac, A History of the Mathematical Theory of Probability from the Time of Pascal to that of Laplace (Cambridge: Cambridge University Press, 2014). Tversky, Amos and Daniel Kahneman, “Judgment Order Uncertainty: Heuristics and Biases,” Science, vol. 185 (1974), pp. 1127–1191. Tversky, Amos and Daniel Kahneman, “The Framing of Decisions and the Psychology of Choice,” Science, vol. 211 (1981), pp. 453–458. Tversky, Amos and Daniel Kahneman, “Rational Choice and the Framing of Decisions,” Journal of Business, vol. 59 (1986), pp. 251–278. U.S.  Atomic Energy Commission [U.S.  Nuclear Regulatory Commission], An Assessment of Accident Risks in U.S. Commercial Nuclear Power Plants (Washington, DC, 1974); summary volume AEC Publication No. WASH-1400 (Aug., 1974). Weaver, Warren, Lady Luck: The Theory of Probability (Garden City, New York: Anchor, 1963). Whipple, C., “Philosophical Basis for Risk Analysis,” Annual Review of Energy, vol. 1 (1976), pp. 629–662. White, Gilbert F. (ed.), Natural Hazards (New York: Oxford University Press, 1974).

Index

A Aldous, D., 75 Allais, M., 75 Arrow, K.J., 75 Axelrod, R., 70 B Baratta, P., 77 Borch, K.H., 75 Buchak, L., 75 Burton, I., 1, 59 Butler, J. (Bishop), 6 C Calow, P.P., 1 Chammah, A.M., 70 Church, I.M., 75 Churchill, W., 69 Cohen, J.I., 75 D Dresher, M., 70 E Ellsberg, D., 75 F Fairley, G.W., 75 Feller, W., 24, 75 Ferretti, M.P., 75

Fischhoff, B., 75 Flood, M., 70 G Gigerenzer, G., 75 Green, H.P., 76 H Hacking, I., 76 Handa, J., 76 Hansel, M., 75 Hansson, S.O., 76 Harrington, J.E., 70 Harsanyi, J.C., 76 Hartman, R.J., 75 Hawthorne, J., 76 Hay-Gibson, N., 76 Hitler, A., 8, 69, 70 Howard, N., 70 J Jacoby, O., 76 Jeffrey, R.C., 76 K Kahneman, D., 76, 77 Kates, R.W., 1, 59, 76 Kay, J.A., 76 Kermisch, C., 76 Keyes, R., 76 King, M.A., 76

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Rescher, Risk Theory, SpringerBriefs in Philosophy, https://doi.org/10.1007/978-3-030-78502-4

79

Index

80 Knight, F., 76 Kyburg, H.E. Jr., 76 L Leibniz, G.W., 23 Lichtenstein, S., 77 Lowrance, W.W., 76 Luce, R.D., 76 M Machina, M.D., 76 Macpherson, J.A.E., 76 McKerlie, D., 76 Mlodinow, L., 76 Morgenstern, O., 76 O Oberdiek, J., 77 P Pascal, B., 20, 23, 28, 77 Poundstone, W., 70 Pratt, J.W., 77 Preston, M.G., 77 Pritchard, D., 77 Prothero, D., 77 R Raiffa, H., 76 Rapoport, A., 70 Rava, A.A., 77

Rescher, N., v, 77 Roosevelt, F.D., 69 Rothschild, M., 76, 77 S Schelling, T.C., 77 Shakespeare, W., 36, 65 Shrader-Frechette, K., 77 Simon, H.A., 77 Sjöberg, L., 77 Slovic, P., 18, 76, 77 Starr, C., 77 Stiglitz, J.E., 77 T Taleb, N.N., 77 Thomson, J.J., 77 Tobin, J., 77 Todhunter, I., 28, 77 Truman, H.S., 32 Tucker, A.W., 70 Tversky, A., 76, 77 V von Moltke, H., 23 von Neumann, J., 76 W Weaver, W., 77 Whipple, C., 77 White, G.F., 1, 59, 77 Williams, J.D., 70