Abstract
Some decision theorists criticize expected utility decision analysis and propose mean-risk decision analysis as a replacement. They claim that expected utility decision analysis neglects attitudes toward risk whereas mean-risk decision analysis accords these attitudes their proper status. However mean-risk decision analysis and expected utility decision analysis are not incompatible, and it is advantageous for decision theory to develop each in a way that complements the other. Here I present a mean-risk rule that governs preferences among options and options given states. This mean-risk rule complements an expected utility rule that takes the utility of an option-state pair as the utility of the option given the state. I argue for the mean-risk rule using principles concerning basic intrinsic desires. The rule is comparative, but the last section offers some suggestions for its quantitative development.
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I am grateful for comments from my colleague, Henry E. Kyburg, Jr.
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Weirich, P. Mean-risk decision analysis. Theor Decis 23, 89–111 (1987). https://doi.org/10.1007/BF00127338
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DOI: https://doi.org/10.1007/BF00127338