Yes, it is unrealistic. The problem is that no-one has devised something more complex that everyone agrees on, leaving EU (expected utility) theory as the only Schelling point in the field.
With the VNM axioms (and all similar setups for deriving utility functions), there are no decision trees and no history. Decisions are one-off, and assumed to be determined by a preference relation which considers only the two options presented. There is no past and no future for the agent making these “decisions”.
I put quote marks there because a decision in the real world leads to actions which change the world in some way according to the agent’s intentions. Actions are followed by more decisions and actions, and so on. All of this is excluded from the VNM framework, in which there are no “decisions”, only preferences. EU theory hardly merits being called a decision theory, for all that the SEP article on decision theory talks almost exclusively about EU and only dips a toe into the waters of sequential decisions, recording how philosophers have made rather heavy weather even of the simple story of Ulysses and the sirens.
If you try to extend the VNM framework to the real world of sequential decisions and strategies, you end up making the “outcomes” be all possible configurations of the whole of your future light-cone. The preference relation is defined on all pairs of these configurations. The agent’s “actions” are all the possible sequences of its individual actions. But who can know how their actions will affect their entire future light-cone, or what actions will become available to them in their far future?
I do not think that EU theory can usefully be extended in this way. It is a spherical cow too far.
Yes, it is unrealistic. The problem is that no-one has devised something more complex that everyone agrees on, leaving EU (expected utility) theory as the only Schelling point in the field.
With the VNM axioms (and all similar setups for deriving utility functions), there are no decision trees and no history. Decisions are one-off, and assumed to be determined by a preference relation which considers only the two options presented. There is no past and no future for the agent making these “decisions”.
I put quote marks there because a decision in the real world leads to actions which change the world in some way according to the agent’s intentions. Actions are followed by more decisions and actions, and so on. All of this is excluded from the VNM framework, in which there are no “decisions”, only preferences. EU theory hardly merits being called a decision theory, for all that the SEP article on decision theory talks almost exclusively about EU and only dips a toe into the waters of sequential decisions, recording how philosophers have made rather heavy weather even of the simple story of Ulysses and the sirens.
If you try to extend the VNM framework to the real world of sequential decisions and strategies, you end up making the “outcomes” be all possible configurations of the whole of your future light-cone. The preference relation is defined on all pairs of these configurations. The agent’s “actions” are all the possible sequences of its individual actions. But who can know how their actions will affect their entire future light-cone, or what actions will become available to them in their far future?
I do not think that EU theory can usefully be extended in this way. It is a spherical cow too far.