Probability and Uncertainty in Economic Modeling
The article considers the paradigm of subjective probability and expected utility theory with respect to their applications in the theory of decision-making. Advantages and shortcomings of Savage’s axiomatic in the subjective probability theory are analyzed, the models of beliefs formation are considered. The authors propose a new approach to the analysis of decision-making — a multiple priors model, where an agent attributes to each event not a single probability, but a range of probabilities.
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