Expected Utility

Evaluating decisions by expected utility changes the way we evaluate decisions. It brings home the point that we can’t evaluate decisions with hindsight. Getting hit by a meteor on the way to the store doesn’t make buying bread a bad idea anymore than winning the lottery doesn’t make spending your food money on power ball a good idea.

Critics of President Bush’s decision to go into Iraq are in effect saying “look at that meteor! How can you say buying bread is a good idea?”

Did they have evidence that Hussein was pretending to have WMD? Did any of them suggest that he might be purposely defying the inspectors in order to keep the possibility alive in the minds of other nations that he might still have the weapons that he had used before?

More importantly, if Hussein found it so valuable to have others believe that he had these weapons, might that not mean there was a cost to us of allowing him to succeed in creating that perception, independent of the weapons’ existence? If he thought that the behavior of other actors would be changed in ways that were beneficial enough to him to justify the years of sanctions and threat of war, is it not possible that the behavior of other actors in that case would have been a problem to us?

If, say, we adopted Kyoto, and, in the end, we find that future scientist, on the basis of be a superior understanding of the causal processes involved find that global warming would not have occurred anyway, would that make adopting Kyoto a bad decision? Surely the only way to evaluate decisions is based on the best information we have at the time.