1 Prologue 1
1 The scope of this book ....................................... 1
2 Meta-theoretical vocabulary ................................ 4
2.1 Theories and conceptual frameworks....................... 4
2.2 Descriptive and normative theories ........................ 8
2.3 Axiomatizations ............................................. 12
2.4 Behaviorist, behavioral, and cognitive theories ............ 16
2.5 Rationality ................................................... 17
2.6 Deviations from rationality ................................. 19
2.7 Subjective and objective terms .............................. 20
3 Meta-theoretical prejudices.................................. 22
3.1 Preliminary remark on the philosophy of science ......... 22
3.2 Utility and expected utility “theories” as concep-
tual frameworks and as theories ............................ 23
3.3 On the validity of purely behavioral economic theory .... 25
3.4 What does all this have to do with CBDT? ................. 27

2 Decision rules 29
4 Elementary formula and interpretations ................... 29
4.1 Motivating examples ........................................ 29
4.2 Model ......................................................... 34
4.3 Aspirations and satisficing .................................. 39
4.4 Comparison with EUT....................................... 43
4.5 Comments.................................................... 46
5 Variations and generalizations .............................. 47
5.1 Average similarity ........................................... 47
5.2 Act similarity ................................................ 49
5.3 Case similarity ............................................... 52
6 CBDT as a behaviorist theory ............................... 53
6.1 W-maximization ............................................ 53
6.2 Cognitive specification: EUT................................ 55
6.3 Cognitive specification: CBDT.............................. 56
6.4 Comparing the cognitive specifications .................... 57
7 Case-based prediction ........................................ 59

3 Axiomatic derivation 62
8 Highlights...................................................... 62
9 Model and result .............................................. 64
9.1 Axioms ....................................................... 65
9.2 Basic result ................................................... 67
9.3 Learning new cases .......................................... 68
9.4 Equivalent cases ............................................. 69
9.5 U-maximization ............................................. 71
10 Discussion of the axioms .................................... 73
11 Proofs........................................................... 77

4 Conceptual foundations 91
12 CBDT and expected utility theory.......................... 91
12.1 Reduction of theories ........................................ 91
12.2 Hypothetical reasoning ...................................... 93
12.3 Observability of data......................................... 95
12.4 The primacy of similarity ................................... 96
12.5 Bounded rationality? ......................................... 97
13 CBDT and rule-based systems .............................. 98
13.1 What can be known?......................................... 98
13.2 Deriving case-based decision theory ........................ 100
13.3 Implicit knowledge of rules ................................. 105
13.4 Two roles of rules ............................................ 107

5 Planning 109
14 Representation and evaluation of plans .................... 109
14.1 Dissection, selection, and recombination .................. 109
14.2 Representing uncertainty.................................... 112
14.3 Plan evaluation............................................... 114
14.4 Discussion .................................................... 118
15 Axiomatic derivation......................................... 119
15.1 Set-up ......................................................... 119
15.2 Axioms and result ........................................... 121
15.3 Proof .......................................................... 123
6 Repeated choice 125
16 Cumulative utility maximization .......................... 125
16.1 Memory-dependent preferences ............................. 125
16.2 Related literature ............................................ 127
16.3 Model and results ............................................ 129
16.4 Comments.................................................... 133
16.5 Proofs ......................................................... 134
17 The potential .................................................. 136
17.1 Definition .................................................... 136
17.2 Normalized potential and neo-classical utility............. 138
17.3 Substitution and complementarity ......................... 141

7 Learning and induction 146
18 Learning to maximize expected payoff ..................... 146
18.1 Aspiration-level adjustment ................................. 146
18.2 Realism and ambitiousness ................................. 147
18.3 Highlights .................................................... 150
18.4 Model ......................................................... 153
18.5 Results ........................................................ 156
18.6 Comments.................................................... 158
18.7 Proofs ......................................................... 161
19 Learning the similarity function ............................ 174
19.1 Examples ..................................................... 174
19.2 Counter-example to U-maximization ...................... 177
19.3 Learning and expertise ....................................... 181
20 Two views of induction: CBDT and simplicism .......... 183
20.1 Wittgenstein and Hume ..................................... 183
20.2 Examples ..................................................... 184