Newcombs Paradox

PHIL2020

The paradox of rational decision making

Newcombs paradox was invented by the physicist William
Newcomb. It made its first appearance in literature with Nozick (1969).
Since its discovery it has been intensely debated with no real widely
accepted resolution. The paradox is important as it questions some
fundamental rules of rational decision making. To decide which decision is
rational it is essential to first understand what the paradox entails and
then critically analyse the arguments for the different courses of action.
Newcombs Paradox
The paradox begins with two boxes labelled Box A and Box B. Box A
is transparent and will always contain $1000 ($K). However, Box B is
opaque and will either contain nothing i.e. $0 ($N) or $1,000,000 ($M).
The decision you have to make is to either; only take the contents of Box
B (One boxing, 1B) or take the contents of both Box A and Box B (Two
boxing, 2B). The content of the opaque Box B is decided by a powerful
being called The Predictor who has been invariably accurate in predicting
what choice people will make in the past. If The Predictor thinks you will
1B then it will place $M in Box B. If The Predictor thinks you will 2B then it
will place $N in Box B.
A standard argument for 1B would say that The Predictor has, as
stated in the paradox, been invariably right in the past. Therefore it is
rational to think that it will be right again for your decision. So if you 2B,
the predictor would have correctly predicted that you would 2B and has
placed $N in Box B thus leaving you with only $K. If you were to 1B, then

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The Predictor once again will correctly predict that you would do so and
thus put $M in Box B leaving you with $M. Since $M is greater that $K it is
the rational decision to always 1B.
A standard argument for 2B would be to realise that when you are
facing Box A and Box B the predictor has already made a prediction that
cannot be changed. The only two scenarios that can exist is that either
Box B contains $M or contains $N. If you were in the scenario that Box B
contains the $M then the decision to 1B would leave you with $M while the
decision to 2B would leave you with $M plus $K. Thus the decision to 2B
would give a greater amount than to 1B. If you are in the scenario were
Box B contains $N then 1B would give you $N and 2B would give you $K.
Once again the decision to 2B has led to a greater amount. Therefore the
decision to 2B will always be the most rational decision.
The paradox arises as there is seemingly a decisive and acceptable
arguments to either 1B or 2B. However the options are mutually exclusive
so the idea that you can both 1B and 2B at the same time is
unacceptable. To conclude whether 2B is always better than 1B we must
explore and analyse the reasons for 1B and 2B.
One Boxing
One of the main arguments behind 1B is the idea that it is rational
to maximise expected utility (MEU). Lotteries offer a simple understanding
of the MEU. Lottery 1 (L1) has 1000 tickets with a prize of $1,100 and
Lottery 2 (L2) has 900 tickets and a prize of $1000. MEU for L1 would be
1/1000 x 1,100 which equals 1.10. MEU for L2 would be 1/900 x 1000

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which equals 1.11. Since L2 has a higher MEU than L1, one should invest
in L2. This can easily be understood if you imagine buying all tickets. For
L1 you invest $1000 to receive $1100 i.e. for every $1000 you profit $100,
for L2 you invest $900 and win $1000 i.e. for every $1000 you profit $110.
When applying the MEU to Newcombs paradox we assume that The
Predictor has a high chance of being correct (assume probability h). The
MEU for 1B would be (h x 1,000,000) + ((1-h) x 0) and the MEU for 2B
would be (h x 1,000) + ((1-h) x 1,001,000). If we substitute h = 0.9 i.e.
The Predictor is correct 90% of the time the MEU for 1B and 2B is 900,000
and 101,000 respectively. Clearly 1B has a greater MEU than 2B and is
therefore the rational decision.
The MEU appeals to evidential decision theory where it is argued
that the rational decision, on the condition that the decision has been
chosen, is the one which gives you the best expected outcome. A defence
for the evidential decision theory as seen in Collins (2001) is the Tickle
Defence. Suppose that an occurrence (S) is a sign that a cause (C) leads
to an outcome (O). When looking for the probability of O the knowledge of
C makes it unnecessary the evidence S has for O i.e. P (O/C & S) equals P
(O/C). When applying the tickle defence to Newcombs Paradox we see
that the cause for ones choice and prediction is ones beliefs i.e. the
knowledge of ones beliefs makes it unnecessary knowing the choice. This
provides extra support for the evidential decision theory because ones
beliefs screens off a correlation between a choice and the prediction. The
tickle defence assumes that ones beliefs are known to oneself. It has
been argued that there might be a mechanism unknown in which ones
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beliefs lead to decide on a choice. When this argument is extended to

Newcombs paradox it is possible that ones choice could offer information
about the prediction.
Another approach to help decide the rational course of action is to
observe a group of hypothetical previous participants of this problem. If
100 people previously made a choice and 50 chose to 1B and 50 chose to
2B we would see, since The Predictor has been right up until now, that the
1B people have $M and the 2B people have $K. Therefore assuming you
want maximum gain 1B is the correct decision.
The fundamental reasons for 1B seem on the surface to be quite
acceptable and backed up by the tickle defence yet it is still up open to
criticism and debate providing no conclusive response to the paradox.
Two Boxing
We have seen rational principles for 1B but since the nature of what
a paradox entails there is also a seemingly rational principle for 2B. This is
the Dominance Principle as seen in Sainsbury (2009) which states that an
action is rational if action A will result in you being better off compared to
everything else offered. As stated before no matter what scenario you are
in (Box B has $M or Box B has $N) the action that will lead to the best
result is to 2B. It is important to note that the dominance principle does
not hold if the action A has backwards causation on what is in Box B.
Backwards causation would mean that once you decide to 1B, that causes
The Predictor to place the $M in Box B. Conversely, if you were to decide
to 2B, Box B would then contain $N. The dominance principle claims only

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to hold in the version of Newcombs paradox where The Predictor either

places $M or $N before you stand in front of the boxes. Once faced with
the boxes nothing can change what is in Box B.
A further compelling argument is when considering the availability
of an audience that can see into both boxes when you are about to make
your choice. When you are faced with Box A and Box B the audience will
be able to see what is in Box B and assuming that they have your best
interest at heart will tell you what you should do. If Box B contains $N then
the audience will tell you to 2B as that will result in you getting $K rather
than $N. If Box B contains $M then once again the audience will tell you to
2B as the result would be $M as well as $K which is greater than just $M.
This argument works even if there is no audience as once you are faced
with the two boxes you can conclude that if you yourself could see in Box
B you would 2B no matter if Box B contains $M or $N
To further explore the arguments for 2B it is essential to develop a
new decision theory. While 1B relies on evidential decision theory the
argument behind 2B has led to the commonly known casual decision
theory. This theory begins by assuming that the probability that the
predictor has placed $M in box B is u. From here we can draw several
conclusions. 1) u is equal to the probability (P) of 1B and getting $M which
is also equal to the P (2B) and getting $M as well as $K i.e. the Lot ($L). 2)
(1-u) is equal to the P (1B) and getting $N is equal to P (2B) and getting
$K. In short hand this is:
1) P(1B -> M) = P(2B -> L) = u
2) P(1B -> N) = P(2B -> K) = 1-u
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Therefore the Value (V) of 1B is: V (M) x P (1B -> M) + V (N) x P (1B -> N)
which when substituting appropriate values gives 1,000,000 x u.
The V (2B) is: V (L) x P (2B -> L) + V (K) x P (2B -> K) which when
substituting appropriate values gives 1,000,000 x u + 1000. Therefore for
any value of u i.e. whatever chance the predictor places the $M in Box B
the rational decisional to maximise value is to 2B. The common problem
according to evidential decision theorists is the this principle fails the
tickle defence as previously mentioned
Combined approach
We will finally consider the effects of changing what Box A holds and
see how it affects the rational decisions approaches as seen in Nozick
(1994). Firstly when we look at the dominance principle it states that the
correct response is to firmly 2B. However if we were to change Box A to
have $1 or even $0.000001 it seems that previously firm 2B would be less
sure and lean towards 1B thus going against the dominance principle.
When we look at the MEU principle if we were to assume as before a 90%
correctness from The Predictor and that Box A now holds $900,000 the
equation would change. The MEU for 1B would be (0.9 x 1,000,000) +
(0.1) x 0) which equals $900,000and the MEU for 2B would be (0.9 x
900,000) + (0.1) x 1,900,000) which equals $1,000,000. In this case the
correct decision would be to 2B according to the MEU which is based of
evidential decision theory.
Therefore it can be argued that both sides are not fully convinced by
their own arguments as different values of money is Box A can lead to a

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1B choice turning into a 2B choice and vice versa. The correct decision
might be in weighting the different approaches. Consider an evidentially
expected utility (EEU) to conform to evidential decision theory (main 1B
argument) and casually expected utility (CEU) to conform to causal
decision theory (main 2B argument). It is proposed that the combination
of both attached with different weights (from 0 to 1) would lead to the
superior rational approach i.e. Correct approach = W(c) x CEU + W (e) x
EEU.
It is seen that both 1B and 2B have their strengths and weaknesses.
They both have different theories (evidential vs causal) that are accepted
by many. 1B has an easy to understand hypothetical of previous people
who faced the problem leading to the obvious conclusion of 1B yet
conversely the idea of an audience leads to the conclusion that 2B is the
correct decision. It was also found that if we are to change the contents of
Box A that might lead to the destabilisation of previous rational
approaches. When summing together all the arguments and counter
arguments it seems that there is no obvious advantage to 2B rather than
1B and vice versa. Therefore the rational decision remains unknown.

References

Nozick, R. (1969). Newcombs problem and two principles of choice.

In Essays in honor of Carl G. Hempel (pp. 114-146). Springer Netherlands.

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Sainsbury, R. M. (2009). Paradoxes. Cambridge University Press.

Nozick, R. (1994). The nature of rationality. Princeton University Press.

Collins, J. (2001). Newcomb's problem.

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