Subjective Probability without Monotonicity: Or How Machina's Mom May Also Be Probabilistically Sophisticated
AbstractIf an agent's preferences over subjectively uncertain acts are consistent with him having a subjective probability distribution over the states of nature, then those preferences can induce consistent preferences over 'objectively' risky lotteries. Such 'probabilistically sophisticated' behavior allows us to treat decision making under uncertainty as though it is under risk. This paper first characterizes exactly what probabilistic sophistication entails for an agent's beliefs about the likelihood of states of nature. Secondly, it presents characterizations of probabilistically sophisticated individuals whose induced lottery preferences obey neither the independence axiom nor a monotonicity property that is shown to share some of the nature of independence. Copyright 1995 by The Econometric Society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Econometric Society in its journal Econometrica.
Volume (Year): 63 (1995)
Issue (Month): 1 (January)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- : Constantinos Antoniou & : Glenn W. Harrison & : Morten I. Lau & : Daniel Read, 2013. "Subjective Bayesian Beliefs," Working Papers wpn13-02, Warwick Business School, Finance Group.
- Simon Grant & Atsushi Kajii & Ben Polak, 1999.
"Decomposable Choice Under Uncertainty,"
Cowles Foundation Discussion Papers
1207, Cowles Foundation for Research in Economics, Yale University.
- FLEURBAEY, Marc & ZUBER, Stéphane, 2011. "Inequality aversion and separability in social risk evaluation," CORE Discussion Papers 2011023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Massimo Marinacci, 2002.
"Probabilistic Sophistication and Multiple Priors,"
Econometric Society, vol. 70(2), pages 755-764, March.
- Chew, Soo Hong & Sagi, Jacob S., 2012. "An inequality measure for stochastic allocations," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1517-1544.
- Klaus Nehring, 2006. "Decision-Making in the Context of Imprecise Probabilistic Beliefs," Economics Working Papers 0034, Institute for Advanced Study, School of Social Science.
- Simon Grant & Atsushi Kajii, 2005. "Probabilistically Sophisticated Multiple Priors," KIER Working Papers 608, Kyoto University, Institute of Economic Research.
- J. Michelle Brock & Andreas Lange & Erkut Y. Ozbay, 2013.
"Dictating the Risk: Experimental Evidence on Giving in Risky Environments,"
American Economic Review,
American Economic Association, vol. 103(1), pages 415-37, February.
- J. Michelle Brock & Andreas Lange & Erkut Y. Ozbay, 2011. "Dictating the risk – experimental evidence on giving in risky environments," Working Papers 139, European Bank for Reconstruction and Development, Office of the Chief Economist.
- Edi Karni, 2005. "A New Approach to Modeling Decision-Making under Uncertainty and Defining Subjective Probabilities," Economics Working Paper Archive 519, The Johns Hopkins University,Department of Economics.
- Marc Fleurbaey, 2009. "Assessing risky social situations," LSE Research Online Documents on Economics 27006, London School of Economics and Political Science, LSE Library.
- Cerreia-Vioglio, Simone & Maccheroni, Fabio & Marinacci, Massimo & Montrucchio, Luigi, 2012.
"Probabilistic sophistication, second order stochastic dominance and uncertainty aversion,"
Journal of Mathematical Economics,
Elsevier, vol. 48(5), pages 271-283.
- Simone Cerreia-Vioglio & Fabio Maccheroni & Massimo Marinacci & Luigi Montrucchio, 2010. "Probabilistic Sophistication, Second Order Stochastic Dominance, and Uncertainty Aversion," Carlo Alberto Notebooks 174, Collegio Carlo Alberto.
- Marc Fleurbaey & Stéphane Zuber, 2013. "Inequality aversion and separability in social risk evaluation," Economic Theory, Springer, vol. 54(3), pages 675-692, November.
- Skiadas, Costis, 1997. "Subjective Probability under Additive Aggregation of Conditional Preferences," Journal of Economic Theory, Elsevier, vol. 76(2), pages 242-271, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.