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Unknowable states and choice-based definitions of subjective probabilities

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  • Karni, Edi

Abstract

This paper exposes a difficulty in applying the revealed preference methodology to the definition of subjective probabilities. It shows that in the presence of unknowable states it is impossible to provide choice-based foundations of prior probabilities in Bayes' theory.

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  • Karni, Edi, 2008. "Unknowable states and choice-based definitions of subjective probabilities," Economics Letters, Elsevier, vol. 99(3), pages 534-536, June.
    • Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:534-536
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    References listed on IDEAS

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    1. Karni, Edi, 1999. "Elicitation of Subjective Probabilities When Preferences Are State-Dependent," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 479-486, May.
    2. Machina, Mark J & Schmeidler, David, 1992. "A More Robust Definition of Subjective Probability," Econometrica, Econometric Society, vol. 60(4), pages 745-780, July.
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