Analogical Reasoning in Decision Processes

We give a de…nition of reasoning by analogy, which is tailored to a setting of decision making under uncertainty. We present a model of decision making which is based on such a de…nition, and show that it is compatible with a large class of preferences. 1 Reasoning by Analogy Analogy is the recognition that one thing A (a phenomenon, a problem, etc.) is like another thing B and that, therefore, consequences (inferences, explanations, solutions, etc.) that can be drawn from A can be drawn from B as well. Analogy is a reasoning process that is so pervasive in human life that can be viewed as one of the cornerstones of human thought. In the Dictionary of Philosophy of Mind [7], Analogy is recognized as, “... an important kind of thinking contributing to such cognitive tasks as explanation, planning and decision making (Paul Thagard)”. Because of this, it is not surprising that the concept of Analogy has been an object of philosophical re‡ection since ancient times.1 As of today, research on the concept of Analogy and on the process of analogical reasoning has become increasingly important in the study of Arti…cial Intelligence (see, for instance, [10]). Again, this is not surprising given the nature of the subject. What is surprising is that classical theories of decision making under uncertainty do not explicitly recognize the role played by analogical reasoning. Theories of decision making under uncertainty are concerned with explaining/guiding the behavior of individuals who have to choose a course of action I bene…ted from comments and suggestions from Paolo Ghirardato, Tzachi Gilboa, Ket Richter, Aldo Rustichini, Paolo Siconol…, Max Stinchcombe and Stan Wellisz. I also wish to thank seminar participants at RUD 2003, CalTech, University of Minnesota, University of Texas-Austin, Columbia University, University of Rochester, Rutgers University, University of Turin, Ohio State University. yDepartment of Economics, Columbia University, 1019 IAB, 420 W 118th street, NY, NY 10027. Email: [email protected]. 1To give just one example, re‡ections on the concept recur several times in St. Thomas from the Summa Theologica to the De potentia to the De veritates.