My book Risk and Rationality is about the principles that govern rational decision-making in the face of risk. A distinctive feature of these decisions is that individuals are forced to consider how their choices will turn out under various circumstances, and decide how to trade off the possibility that a choice will turn out well against the possibility that it will turn out poorly. The orthodox view is that there is only one acceptable way to do this: rational individuals must maximize expected utility. The contention of this book, however, is that the orthodox theory (expected utility theory) dictates an overly narrow way in which considerations about risk can play a role in an individual’s choices. Combining research from economics and philosophy, this book argues for an alternative, more permissive, theory of decision-making: one that allows individuals to pay special attention to the worst-case or best-case scenario (among other “global features” of gambles). This theory, risk-weighted expected utility theory, better captures the preferences of actual decision-makers. Furthermore, it isolates the distinct roles that beliefs, desires, and risk-attitudes play in decision-making. Finally, contra the orthodox view, this book argues that decision-makers whose preferences can be captured by risk-weighted expected utility theory are rational. Thus, this book is in many ways a vindication of the ordinary decision-maker – particularly his or her attitude towards risk – from the point of view of even ideal rationality.
I reply to an author-meets-critics symposium in 'Revisiting Risk and Rationality: A Reply to Pettigrew and Briggs' and in 'Precis' and 'Replies to Commentators'.