Case-Based Decision Theory

This paper suggests that decision-making under uncertainty is, at least partly, case-based. We propose a model in which cases are primitive, and provide a simple axiomatization of a decision rule that chooses a “best” act based on its past performance in similar cases. Each act is evaluated by the sum of the utility levels that resulted from using this act in past cases, each weighted by the similarity of that past case to the problem at hand. The formal model of case-based decision theory naturally gives rise to the notions of satisficing decisions and aspiration levels. In reality, all arguments from experience are founded on the similarity which we discover among natural objects, and by which we are induced to expect effects similar to those which we have found to follow from such objects.… From causes which appear similar we expect similar effects. This is the sum of all our experimental conclusions (Hume, 1748).