The weight of argument and non-additive measures: a note
AbstractThis note argues that a representation of the epistemic state of the individual through a non-additive measure provides a novel account of Keynes’s view of probability theory proposed in his Treatise on Probability. The paper shows, first, that Keynes’s “non-numerical probabilities” can be interpreted in terms of decisional weights and distorsions of the probability priors. Second, that the degree of non-additivity of the probability measure can account for the confidence in the assessment without any reference to a second order probability. And, third, that the criterion for decision making under uncertainty derived in the non-additive literature incorporates a measure of the degree of confidence in the probability assessment. The paper emphasises the Keynesian derivation of Ellsberg’s analysis: the parallel between Keynes and Ellsberg is deemed to be significant since Ellsberg’s insights represent the main starting point of the modern developments of decision theory under uncertainty and ambiguity.
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Bibliographic InfoPaper provided by Department of Economic Policy, Finance and Development (DEPFID), University of Siena in its series Department of Economic Policy, Finance and Development (DEPFID) University of Siena with number 003.
Date of creation: Jun 2007
Date of revision:
uncertainty; probabilities; Keynes.;
Find related papers by JEL classification:
- B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
- NEP-HPE-2008-01-05 (History & Philosophy of Economics)
- NEP-UPT-2008-01-05 (Utility Models & Prospect Theory)
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