Abstract
The path to a modern theory of rationality and decision has led through many stages and has by no means reached a final goal. Time and again, theories have been proposed that have led to paradoxical consequences, and it is precisely these paradoxical consequences that have in turn stimulated the progress of the theory in the sense of an ascending spiral of knowledge. In this paper I will briefly sketch the development and then deal with a paradox of the theory of rationality that was pointed out by Daniel Ellsberg (1961, The Quarterly Journal of Economics 75:643–669). Experimental data show the resilience of the “anomaly”. Observed decisions contradict the “sure-thing principle” which is a core axiom of rational decision making. The hypothesis of a distinction between more or less rational actors was refuted. Even subjects who chose “rational” options in social dilemma games behave “irrational” when faced with the Ellsberg paradox.
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Notes
- 1.
The problem itself had been known long before as the “problem of the unfinished game”. Among others, the mathematicians Luca Pacioli (1494), Girolamo Cardano (1539), and Niccolo Tartaglia (1556) dealt with it. According to Devlin (2008), Tartaglia was of the opinion that the problem was unsolvable. For the history, see Devlin (2008). What may be considered a simple problem today was an enormous challenge for the greatest thinkers of their time before the development of probability theory. The coin-tossing game described below is a simple example. Pascal used a different example with four dice.
- 2.
Daniel Ellsberg was an employee of the Rand Corporation, a think-tank on military strategy issues. The Rand Corporation had many game theorists in its ranks; the Prisoner's Dilemma also emerged from the Corporation. Daniel Ellsberg, who worked for the Pentagon at the time, later became a peace activist. He was the courageous whistleblower who – like Edward Snowden – risked his freedom on the grounds of conscience in order to expose the deception of the American public regarding the Vietnam War by the Nixon administration (the “Pentagon Papers”). Snowden, in his own words, followed Daniel Ellsberg's example. In the Steven Spielberg film “The Post”, the publication of the Pentagon Papers is staged. Ellsberg was awarded the Dresden Peace Prize in 2016.
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Acknowledgements
I would like to thank Felix Ries, University of Leipzig, Germany, for the implementation of the survey and the data analysis. I am grateful to Nikesh Kumar, Institute of Engineering and Management (IEM), Kolkata, India, for his support of the survey, and to the students of the IEM for participating.
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Diekmann, A. (2021). From Pascal to Ellsberg: Paradoxes of Rationality Stimulate the Progress of Decision Theory. In: Krumpal, I., Raub, W., Tutić, A. (eds) Rationality in Social Science. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-33536-6_2
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