CHAPTER 12 VERISIMILITUDE AS AN EPISTEMIC UTILITY Cognitive decision theory was first developed in the early 1960s by Carl G. Hempel and Isaac Levi, who suggested that the acceptance of scientific hypotheses could be based upon the rule of maximizing 'epistemic utilities'. In contrast with various kinds of 'practical' (e.g. economic) benefits, the epistemic utilities should reflect the cognitive aims of scientific inquiry, such as truth, information, systematic power, and simplicity. In this chapter, we shall see that the idea of using truthlikeness (as defined by our min-sum function Tr = MKfs') as an epistemic utility leads to a rational theory of scientific inference: preference between the rival answers to a cognitive problem is determined by the values of the function ver of estimated verisimilitude (Section 2). It turns out that, in a sense, this theory contains as a special case Levi's classical account of cognitive decision making: if the distance function L\. on a cognitive problem is trivial, our function Tr formally reduces to a variant of Levi's definition of epistemic utility in Gambling with Truth (1967) (Section 3). We shall also see that certain standard results about point estimation in Bayesian statistics can be reinterpreted in terms of cogni- tive decision problems where verisimilitude is the relevant utility. This observation suggests a new systematic way of approaching Bayesian interval estimation (Section 5). We shall also argue that no non- Bayesian or non-probabilistic decision rule is adequate for cognitive problems, so that the Popperian programme of verisimilitude is applic- able to the problems of theoretical preference if and only if there is an independent solution to the traditional problem of induction (Section 4). 12.1. COGNITIVE DECISION THEORY The classical theory of utility, as developed by Daniel Bernoulli in 1730, is based upon the principle of mathematical expectation: a rational person facing a choice between uncertain alternatives should seek to maximize the expected value of utility or 'moral worth'. Modern 406 I. Niiniluoto, Truthlikeness © D. Reidel Publishing Company, Dordrecht, Holland 1987