Counterfactuals and Two Kinds of Expected Utility

Abstract

We begin with a rough theory of rational decision-making. In the first place, rational decision-making involves conditional propositions: when a person weighs a major decision, it is rational for him to ask, for each act he considers, what would happen if he performed that act. It is rational, then, for him to consider propositions of the form ‘If I were to do a, then c would happen’. Such a proposition we shall call a counterfactual, and we shall form counterfactuals with a connective ‘☐→' on this pattern: ‘If I were to do a, then c would happen’ is to be written ‘I do a ‘☐→' c happens’.

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An earlier draft of this paper was circulated in January 1976. A much shorter version was presented to the 5th International Congress of Logic, Methodology, and Philosophy of Science, London, Ontario, August 1975. There, and at the earlier University of Western Ontario research colloquium on Foundations and Applications of Decision Theory we benefited from discussions with many people; in particular we should mention Richard Jeffrey, Isaac Levi, Barry O’Neill and Howard Sobel.