Probabilistic sophistication and stochastic monotonicity in the Savage framework
Machina and Schmeidler [Machina, M., Schmeidler, D., 1992. A more robust definition of subjective probability. Econometrica 60, 745-780] show that probabilistic sophistication can be obtained in a Savage setting without imposing expected utility by dropping Savage's axiom P2 (sure-thing principle) and strengthening his axiom P4 (weak comparative probability). Their stronger axiom, however, embodies a degree of separability analogous to P2. In this note, we obtain probabilistic sophistication using Savage's original axiom P4 and a weaker analog of Savage's P2.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grant, Simon & Polak, Ben, 2006. "Bayesian beliefs with stochastic monotonicity: An extension of Machina and Schmeidler," Journal of Economic Theory, Elsevier, vol. 130(1), pages 264-282, September.
- Mark J. Machina & David Schmeidler, 1990.
"A More Robust Definition of Subjective Probability,"
Discussion Paper Serie A
306, University of Bonn, Germany.
- Machina, Mark J & Schmeidler, David, 1992. "A More Robust Definition of Subjective Probability," Econometrica, Econometric Society, vol. 60(4), pages 745-80, July.
- Machina,Mark & Schmeidler,David, 1991. "A more robust definition of subjective probability," Discussion Paper Serie A 365, University of Bonn, Germany.
- Sarin, Rakesh & Wakker, Peter P., 2000. "Cumulative dominance and probabilistic sophistication," Mathematical Social Sciences, Elsevier, vol. 40(2), pages 191-196, September.
When requesting a correction, please mention this item's handle: RePEc:eee:matsoc:v:55:y:2008:i:3:p:371-380. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.