The Ethics of Economic Decision Rules

Sven Ove Hansson

in The Oxford Handbook of Professional Economic Ethics

Published online November 2014 | | DOI:

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The purpose of economic decision rules is to guide decision makers who have competing goals or are uncertain about how their goals can be fulfilled. This chapter discusses the assumptions underlying major decision rules such as expected utility maximization, discounting of future events, maximin, and various types of efficiency criteria including cost effectiveness and Pareto efficiency. All of these decision rules impose restrictions on the information to be taken into account, and since these restrictions are value laden, so are the decision rules. However, in the process of applying decision rules, the value assumptions are often put out of sight instead of being brought forward and discussed.

Keywords: cautiousness index; cost–benefit analysis; discounting; economic decision rule; efficiency; expected utility; goal conflict; maximin; optimism–pessimism index; time preference

Article.  13174 words. 

Subjects: History of Economic Thought ; Industry Studies

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