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A Rehabilitation of the Principle of Insufficient Reason

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  • Hans-Werner Sinn

Abstract

It is shown that two of the axioms necessary for the expected utility rule imply the Principle of Insufficient Reason. Whenever a decision maker knows the possible states of the world, but completely lacks information about the plausibility of each single state, he has to behave as if all states occurred with the same objective probability, known with certainty. The result is applied to decision trees and used to solve a problem formulated by Savage in order to discredit the classical version of the Principle of Insufficient Reason.

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  • Hans-Werner Sinn, 1980. "A Rehabilitation of the Principle of Insufficient Reason," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(3), pages 493-506.
    • Handle: RePEc:oup:qjecon:v:94:y:1980:i:3:p:493-506.
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    File URL: http://hdl.handle.net/10.2307/1884581
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    2. Claire Crawford & Lorraine Dearden & Ellen Greaves, 2013. "Identifying the drivers of month of birth differences in educational attainment," DoQSS Working Papers 13-07, Quantitative Social Science - UCL Social Research Institute, University College London.
    3. Fulvio Fontini, 2009. "Probability And Uncertainty: The Legacy Of Georgescu‐Roegen," Metroeconomica, Wiley Blackwell, vol. 60(2), pages 324-342, May.
    4. Camilla Froyn, 2005. "Decision Criteria, Scientific Uncertainty, and the Globalwarming Controversy," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 10(2), pages 183-211, April.
    5. Maarten Janssen, 2001. "Rationalizing Focal Points," Theory and Decision, Springer, vol. 50(2), pages 119-148, March.
    6. Alex Possajennikov, 2018. "Belief formation in a signaling game without common prior: an experiment," Theory and Decision, Springer, vol. 84(3), pages 483-505, May.
    7. Emily Ho & David V. Budescu & Valentina Bosetti & Detlef P. Vuuren & Klaus Keller, 2019. "Not all carbon dioxide emission scenarios are equally likely: a subjective expert assessment," Climatic Change, Springer, vol. 155(4), pages 545-561, August.
    8. Fontini, Fulvio & Umgiesser, Georg & Vergano, Lucia, 2010. "The role of ambiguity in the evaluation of the net benefits of the MOSE system in the Venice lagoon," Ecological Economics, Elsevier, vol. 69(10), pages 1964-1972, August.
    9. Burer, Samuel & Jones, Philip C. & Lowe, Timothy J., 2008. "Coordinating the supply chain in the agricultural seed industry," European Journal of Operational Research, Elsevier, vol. 185(1), pages 354-377, February.
    10. Ali Ahmed & Göran Skogh, 2006. "Choices at various levels of uncertainty: An experimental test of the restated diversification theorem," Journal of Risk and Uncertainty, Springer, vol. 33(3), pages 183-196, December.
    11. Eichberger, Jürgen & Pasichnichenko, Illia, 2021. "Decision-making with partial information," Journal of Economic Theory, Elsevier, vol. 198(C).
    12. Singer, Marcos & Donoso, Patricio & Rodríguez-Sickert, Carlos, 2008. "A static model of cooperation for group-based incentive plans," International Journal of Production Economics, Elsevier, vol. 115(2), pages 492-501, October.
    13. Alan G. Isaac, 2019. "Exploring the Social-Architecture Model," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(4), pages 565-589, October.
    14. Drouvelis, Michalis & Müller, Wieland & Possajennikov, Alex, 2012. "Signaling without a common prior: Results on experimental equilibrium selection," Games and Economic Behavior, Elsevier, vol. 74(1), pages 102-119.
    15. Susan Stratton Sayre & Rachel Goodhue & Leo Simon, "undated". "Probabilistic Political Viability: A Methodology for Predictive Political Economy," Working Papers 2012-01, Smith College, Department of Economics.
    16. Krakel, Matthias, 2000. "Relative deprivation in rank-order tournaments," Labour Economics, Elsevier, vol. 7(4), pages 385-407, July.
    17. Terje Aven, 2010. "On the Need for Restricting the Probabilistic Analysis in Risk Assessments to Variability," Risk Analysis, John Wiley & Sons, vol. 30(3), pages 354-360, March.
    18. Keith Dougherty & Julian Edward, 2012. "Voting for Pareto optimality: a multidimensional analysis," Public Choice, Springer, vol. 151(3), pages 655-678, June.

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