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Is it Possible to Define Subjective Probabilities in Purely Behavioral Terms? A Comment on Epstein-Zhang (2001)

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  • Klaus Nehring

    (Department of Economics, University of California Davis)

Abstract

It is shown that well-behaved preference orderings may exhibit the Ellsberg paradox on the set of unambiguous events as defined by Epstein and Zhang (2001). Moreover, since such counterexamples can be constructed even when the set of unambiguous events is rich, EZ’s main representation result does not clarify satisfactorily when the proposed definition delivers probabilistic sophistication on unambiguous events. We conclude by conjecturing that these problems indicate the existence of inherent limitations of a strictly behavioral approach to identifying probabilistic beliefs in the presence of ambiguity, rather than deficiencies in EZ’s implementation of that approach.

Suggested Citation

  • Klaus Nehring, 2006. "Is it Possible to Define Subjective Probabilities in Purely Behavioral Terms? A Comment on Epstein-Zhang (2001)," Economics Working Papers 0067, Institute for Advanced Study, School of Social Science.
    • Handle: RePEc:ads:wpaper:0067
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    References listed on IDEAS

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    Cited by:

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    3. Grant, Simon & Rich, Patricia & Stecher, Jack, 2022. "Bayes and Hurwicz without Bernoulli," Journal of Economic Theory, Elsevier, vol. 199(C).
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    7. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2011. "Definitions of ambiguous events and the smooth ambiguity model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(2), pages 399-424, October.

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