Utility Theory From Jeremy Bentham To Daniel Kahneman.OK.OK.pdf

Utility theory from Jeremy Bentham
to Daniel Kahneman





Daniel Read



1 Department of Operational Research, London School of Economics





























Working Paper No: LSEOR 04-64 ISBN No: 07530 1689 9
First published in Great Britain in 2004
by the Department of Operational Research
London School of Economics and Political Science



Copyright © The London School of Economics and Political Science, 2004








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Working Paper No: LSEOR 04-64 ISBN No: 07530 1689 9
Utility theory from Jeremy Bentham to Daniel Kahneman

A standard model of motivation is that a person has a desire Y, and if they
believe that by doing act X, they can achieve Y, then (assuming there is no barrier to
doing X or some stronger desire than Y) they will choose X. The normative problem
of rationality concerns what choices and desires people should have. The most well-
established approach to this problem is rational choice theory, which prescribes the
most effective ways to achieve given desires (Sugden, 1991). The only constraints
rational choice theory puts on desires is that they be consistent. Many observers are
dissatisfied with such a purely structural definition of rationality, and want rules of
rationality to say something substantive about what desires are best. t (1981),
for example, voiced this con