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States and Contingencies: How to Understand Savage without Anyone Being Hanged

Author

Listed:
  • Itzhak Gilboa
  • Stefania Minardi
  • Larry Samuelson
  • David Schmeidler

Abstract

Models of decision-making under uncertainty gain much of their power from the specification of states so as to resolve all uncertainty. However, this specification can undermine the presumed observability of preferences on which axiomatic theories of decision-making are based. We introduce the notion of a contingency. Contingencies need not resolve all uncertainty, but preferences over functions from contingencies to outcomes are (at least in principle) observable. In sufficiently simple situations, states and contingencies coincide. In more challenging situations, the analyst must choose between sacrificing observability in order to harness the power of states that resolve all uncertainty, or preserving observability by working with contingencies. JEL Codes: D8.

Suggested Citation

  • Itzhak Gilboa & Stefania Minardi & Larry Samuelson & David Schmeidler, 2020. "States and Contingencies: How to Understand Savage without Anyone Being Hanged," Revue économique, Presses de Sciences-Po, vol. 71(2), pages 365-385.
    • Handle: RePEc:cai:recosp:reco_712_0365
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    Citations

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    Cited by:

    1. Ani Guerdjikova & Jürgen Eichberger, 2023. "Cases and States ," Working Papers hal-03962412, HAL.
    2. Gilboa, Itzhak & Samuelson, Larry & Schmeidler, David, 2022. "Learning (to disagree?) in large worlds," Journal of Economic Theory, Elsevier, vol. 199(C).
    3. Fan Wang, 2022. "Rank-Dependent Utility Under Multiple Priors," Management Science, INFORMS, vol. 68(11), pages 8166-8183, November.

    More about this item

    Keywords

    states; contingencies; uncertainty; preferences; choice;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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