There is a tension between normative and descriptive elements in the theory of rational belief. This tension has been reflected in work in psychology and decision theory as well as in philosophy. Canons of rationality should be tailored to what is humanly feasible. But rationality has normative content as well as descriptive content.

A number of issues related to both deductive and inductive logic can be raised. Are there full beliefs – statements that are categorically accepted? Should statements be accepted when they become overwhelmingly probable? What is the structure imposed on these beliefs by rationality? Are they consistent? Are they deductively closed? What parameters, if any, does rational acceptance depend on? How can accepted statements come to be rejected on new evidence

Should degrees of belief satisfy the probability calculus? Does conformity to the probability calculus exhaust the rational constraints that can be imposed on partial beliefs? With the acquisition of new evidence, should beliefs change in accord with Bayes' theorem? Are decisions made in accord with the principle of maximizing expected utility? Should they be?

A systematic set of answers to these questions is developed on the basis of a probabilistic rule of acceptance and a conception of interval-valued logical probability according to which probabilities are based on known frequencies. This leads to limited deductive closure, a demand for only limited consistency, and the rejection of Bayes' theorem as universally applicable to changes of belief. It also becomes possible, given new evidence, to reject previously accepted statements.

Story grammars have been proposed as a means of expressing a theory of stories. Story grammarians claim that stories are a linguistic form in much the same sense that sentences are, and that we can attribute constituent structure to stories in much the same way we attribute it to sentences. Just as sentences and their constituent structure can be characterized by sentence grammars, so stories and their constituent structure can be characterized by a story grammar. However, the analogy between story grammars and sentence grammars is ill conceived. It is based on a category error that assumes stories to be textual entities like sentences. This is demonstrably not the case. Moreover, this confusion is the cause of most of the misunderstandings about story grammars and what they can accomplish. Once this mistake is acknowledged, the possible contribution of story grammars to a theory of stories is considerably diminished. In place of story grammars, I propose the rudiments of a theory, called the theory of story points. Although it lacks some of the aesthetic appeal of story grammars, the theory of story points seems a more promising route to a meaningful theory of stories. The theory is being used as a component of a computer story-understanding system under development at Berkeley. In addition, some very preliminary experiments conducted on the basis of this approach seem to lend it some psychological plausibility.