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Keynes's "non-numerical" probabilities and non-additive measures

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  • Basili, Marcello
  • Zappia, Carlo

Abstract

This paper 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 the Treatise on Probability. The paper shows, first, that Keynes's "non-numerical" probabilities can be interpreted in terms of decision weights and distortions of the probability priors. Second, it is argued that the degree of non-additivity of the probability measure can account for the confidence in a probability assessment without any reference to a second order probability, as suggested by Keynes's notion of "weight of argument". And, third, it is identified a criterion for decision making under uncertainty developed in the non-additive literature that incorporates a measure of the degree of confidence in the probability assessment. The paper aims to substantiate the view, put forward in a recent paper in this journal, that Keynes's analysis of uncertainty has continuing relevance to decision theory and can provide the foundations for a theory of decision making under uncertainty that is arguably more general than subjective expected utility theory.

Suggested Citation

  • Basili, Marcello & Zappia, Carlo, 2009. "Keynes's "non-numerical" probabilities and non-additive measures," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 419-430, June.
  • Handle: RePEc:eee:joepsy:v:30:y:2009:i:3:p:419-430
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Carlo Zappia, 2012. "Re-reading Keynes after the crisis: probability and decision," Department of Economics University of Siena 646, Department of Economics, University of Siena.
    2. 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.
    3. Marcello Basili & Carlo Zappia, 2018. "Ellsberg’s Decision Rules and Keynes’s Long-Term Expectations," Department of Economics University of Siena 777, Department of Economics, University of Siena.
    4. Carlo Zappia, 2015. "Daniel Ellsberg on the Ellsberg Paradox," Department of Economics University of Siena 716, Department of Economics, University of Siena.

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