On the Determination of Subjective Probability by Choices
AbstractThe paper explores the uniqueness properties of the subjective probabilities in two axiomatizations of state-dependent preferences. Karni, Schmeidler, and Vind's (KSV 1983) system depends on selecting an arbitrary auxiliary probability, and as such, does not guarantee the uniqueness of the derived subjective probability. However, an axiom system initially designed by Karni and Schmeidler (KS 1981) and further elaborated upon here does guarantee the desired uniqueness as well as a useful property of "stability" of the derived solution. When the preference relation displays state-independence, even the KS probabilities may not agree with those derived from the classic Anscombe-Aumann (AA 1963) theorem. However, we claim that, in this case, the KS rather than the AA probabilities are the appropriate representation of the agent's beliefs.
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.
Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 46 (2000)
Issue (Month): 2 (February)
subjective probability; subjective expected utility; state-dependent utility;
Other versions of this item:
- Karni, E. & Mongin, P., 1997. "On the Determination of Subjective Probability by Choices," Papers 9737, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- E. Karni & Ph. Mongin, 1997. "On the determination of subjective probability by choices," THEMA Working Papers 97-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Robert Nau, 2001. "De Finetti was Right: Probability Does Not Exist," Theory and Decision, Springer, vol. 51(2), pages 89-124, December.
- Brian Hill, 2009.
"Living without state-independence of utilities,"
Theory and Decision,
Springer, vol. 67(4), pages 405-432, October.
- Grant, S. & Karni, E., 2002.
"Why Does it Matter that Beliefs and Valuations be Correctly Represented?,"
2002-12, Tilburg University, Center for Economic Research.
- Simon Grant & Edi Karni, 2005. "Why Does It Matter That Beliefs And Valuations Be Correctly Represented?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 917-934, 08.
- Grant, Simon & Karni, Edi, 2003. "Why Does It Matter That Beliefs and Valuations Be Correctly Represented?," Working Papers 2003-02, Rice University, Department of Economics.
- Hill, Brian, 2010.
"An additively separable representation in the Savage framework,"
Journal of Economic Theory,
Elsevier, vol. 145(5), pages 2044-2054, September.
- Brian, HILL, 2007. "An additively separable representation in the Savage framework," Les Cahiers de Recherche 882, HEC Paris.
- Grant, Simon & Karni, Edi, 2004. "A theory of quantifiable beliefs," Journal of Mathematical Economics, Elsevier, vol. 40(5), pages 515-546, August.
- Sadowski, Philipp, 2008. "Conditional Preference for Flexibility: Eliciting Beliefs from Behavior," MPRA Paper 8614, University Library of Munich, Germany.
- Edi Karni, 2005.
"Foundations of Bayesian Theory,"
Economics Working Paper Archive
524, The Johns Hopkins University,Department of Economics.
- DREZE , Jacques H. & RUSTICHINI, Aldo, 2000. "State-dependent utility and decision theory," CORE Discussion Papers 2000007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Peter J. Hammond, 2013.
"Extending the Original Position: Revisiting the Pattanaik Critique of Vickrey/Harsanyi Utilitarianism,"
Global COE Hi-Stat Discussion Paper Series
gd12-298, Institute of Economic Research, Hitotsubashi University.
- Hammond, Peter J, 2013. "Extending the Original Position : Revisiting the Pattanaik Critique of Vickrey/Harsanyi Utilitarianism," The Warwick Economics Research Paper Series (TWERPS) 1008, University of Warwick, Department of Economics.
- Brian, HILL, 2007.
"When is there state independence?,"
Les Cahiers de Recherche
883, HEC Paris.
- Hill, Brian, 2007. "Three analyses of sour grapes," Les Cahiers de Recherche 873, HEC Paris.
- Giocoli, Nicola, 2011. "From Wald to Savage: homo economicus becomes a Bayesian statistician," MPRA Paper 34117, University Library of Munich, Germany.
- Mongin, Philippe, 2013. "La théorie de la décision et la psychologie du sens commun," Les Cahiers de Recherche 943, HEC Paris.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).
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.