Capacities And Probabilistic Beliefs: A Precarious Coexistence
This paper raises the problem of how to define revealed probabilistic beliefs in the context of the capacity/Choquet Expected Utility model. At the center of the analysis is a decision-theoretically axiomatized definition of "revealed unambiguous events." The definition is shown to impose surprisingly strong restrictions on the underlying capacity and on the set of unambiguous events; in particular, the latter is always an algebra. Alternative weaker definitions violate even minimal criteria of adequacy. Rather than finding fault with the proposed definition, we argue that our results indicate that the CEU model is epistemically restrictive, and point out that analogous problems do not arise within the Maximin Expected Utility model.
|Date of creation:|
|Contact details of provider:|| Postal: University of California Davis - Department of Economics. One Shields Ave., California 95616-8578|
Phone: (530) 752-0741
Fax: (530) 752-9382
Web page: http://www.econ.ucdavis.edu/
More information through EDIRC
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.:
- Schmeidler, David, 1989.
"Subjective Probability and Expected Utility without Additivity,"
Econometric Society, vol. 57(3), pages 571-587, May.
- David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
- Sarin, R. & Wakker, P.P., 1996.
"Revealed likelihood and knightian uncertainty,"
1996-59, Tilburg University, Center for Economic Research.
- Daniel Ellsberg, 2000. "Risk, Ambiguity and the Savage Axioms," Levine's Working Paper Archive 7605, David K. Levine.
- Eichberger, Jurgen & Kelsey, David, 1996.
"Uncertainty Aversion and Preference for Randomisation,"
Journal of Economic Theory,
Elsevier, vol. 71(1), pages 31-43, October.
- Eichberger, J. & Kelsey, D., 1995. "Uncertainty Aversion and Preferences for Randomisation," Department of Economics - Working Papers Series 476, The University of Melbourne.
- Gilboa, Itzhak & Schmeidler, David, 1989.
"Maxmin expected utility with non-unique prior,"
Journal of Mathematical Economics,
Elsevier, vol. 18(2), pages 141-153, April.
When requesting a correction, please mention this item's handle: RePEc:fth:caldec:97-08. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.