The Feasibility of Normative Structures

This paper argues that de Finetti’s theory of normative structures points to important features of decision theory, provides an interesting bridge between decision theory and ethical theory, and suggests a sophisticated analytical foundation for de Finetti’s theory of political economy. The paper is organized as follows. Section II examines the building blocks of de Finetti’s theory of normative structures and discusses de Finetti’s idea that normative structures associated with multiple objectives are central to human decision making. This section briefly reconstructs de Finetti’s theory of optimum problems and its complex relationship to the general theory of maximization. Section III discusses the way in which, according to de Finetti, the theory of optimum decisions suggests a treatment of ‘circumscribed’ rationality rooted in the internal structure of rational decisions once it is acknowledged that rational decisions are almost regularly associated with multiple, and partially conflicting, objectives. Section IV considers de Finetti’s analysis of the relationship between optimum theory and the theory of maximization, and discusses de Finetti’s views on competitive equilibria and their optimal properties. Section V presents the fundamental structure of de Finetti’s theory of pure preference, and highlights the relationship between that general framework and a variety of interpretations and applications. In this context, it is emphasized that the theory of optimum decisions with multiple objectives is formally analogue to the theory of rational decisions under uncertainty (a link suggested by Bruno de Finetti himself). This implies that the formal analysis of preference structures may be associated with the consideration of internal constraints, due either to the relationship among objectives or to the lack of knowledge about possible outcomes. Section VI brings the paper to close by considering then relationship between the theory of pure preference, its various ‘circumscriptions’ (due to context), and de Finetti’s view of economic theory as a theory of normative structures and feasible design.