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Is expected utility theory normative for medical decision making?
1Division of Clinical Decision Making, Department of Medicine, New England Medical Center, Tufts University School of Medicine, Boston, Massachusetts, USA.
Summary
Expected utility theory provides a framework for rational decision-making under uncertainty. However, its independence principle is controversial and may not apply to one-time medical decisions, especially those with risks of death.
Area of Science:
- Decision Sciences
- Behavioral Economics
- Rationality Studies
Background:
- Expected utility theory (EUT) is a foundational model for rational decision-making under uncertainty.
- EUT posits that rational agents adhere to axioms, allowing utility assignment to outcomes and selection of the highest expected utility.
- The independence principle, a core EUT axiom, is frequently violated in practice and its applicability is debated.
Purpose of the Study:
- To critically examine the normative status of the independence principle in expected utility theory.
- To explore the implications of independence principle violations for rationality.
- To assess the suitability of EUT for medical decision-making, particularly in high-stakes, one-time scenarios.
Main Methods:
- Conceptual analysis of expected utility theory axioms.
- Review of experimental findings on preference reversals.
- Philosophical examination of rationality and decision rules.
Main Results:
- The independence principle's necessity for EUT consistency is demonstrated only under specific preference formation methods.
- Violations of the independence principle may indicate irrationality or a critique of the principle itself.
- EUT's reliance on expectation, a long-run concept, limits its applicability to unique medical decisions with significant risks.
Conclusions:
- The independence principle may not be a universally valid rule of consistency for all decision-makers.
- Alternative justifications for EUT are needed, focusing on goal alignment rather than axiomatic adherence.
- Expected utility theory's suitability for critical medical decisions, especially those involving mortality risk, is questionable due to its long-run probabilistic nature.