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Ellsberg Rules and Keynes’s State of Long-Term Expectation: More Than an Accordance

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  • Marcello Basili

Abstract

This paper advances an intuitive way to represent Keynes’s notion of long-term expectation. The epsilon-contamination approach is introduced and a rational and coherent decision rule is derived. The result is evidence that Ellsberg and Keynes share the notion of uncertainty and adopt the same class of decision rules.

Suggested Citation

  • Marcello Basili, 2013. "Ellsberg Rules and Keynes’s State of Long-Term Expectation: More Than an Accordance," Department of Economics University of Siena 685, Department of Economics, University of Siena.
    • Handle: RePEc:usi:wpaper:685
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    More about this item

    Keywords

    Keynes; Ellsberg; expectation; consensus distribution; uncertainty; epsilon-contamination.;
    All these keywords.

    JEL classification:

    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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