AN ELABORATE THEORY of rational decision has been developed by economists and statisticians, and put to widespread use in theoretical and policy studies. This is a powerful, mathematically precise, and tractable theory. Although its adequacy as a description of actual behavior has been widely questioned, it stands as the dominant view of the conditions that a rational decision should satisfy: it is the dominant normative view. I believe this standard decision theory needs to be expanded to incorporate explicitly considerations about the symbolic meaning of actions, along with other factors. A useful entry into the inadequacies of the current standard theory is provided by Newcomb's Problem. My aim is to formulate a broadened decision theory to handle and encompass this problem adequately, and then to apply that broadened theory to illuminate the Prisoner's Dilemma, a problem that incisively sharpens issues about rational social cooperation and whether coercion (sometimes) is necessary to sustain this, and thus has propelled so much formal social theory recently.
Newcomb's Problem is well known, and I shall describe it only briefly here.* A being in whose power to predict your choices correctly you have great confidence is going to predict your choice in the following situation. There are two boxes, B1 and B2. Box B1 contains $1,000; box B2 contains either $1,000,000 ($M) or nothing. You have a choice between two actions: (1) taking what is in both boxes; (2) taking only what is in the second box. Furthermore, you know, and the being knows you know, and so on, that if the being predicts you will take what is in both boxes, he does not put the $M in the second box; if the being predicts you will take only what is in the second box he does put the $M in the second box. First the being makes his prediction; then he puts the $M in the second box or not, according to his prediction; then you make your choice.____________________