IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00870185.html
   My bibliography  Save this paper

On Keynes's conception of the Weight of Evidence

Author

Listed:
  • Alberto Feduzi

    () (Department of Economics - University of Rome III, CAM - University of Cambridge [UK])

Abstract

Various modern decision theories seek to capture the intuition behind Keynes's conception of evidential weight. Keynes was nevertheless hesitant about the practical relevance of weight in the process of rational decision making because of the 'stopping problem' of finding a rational principle to decide where to stop the process of acquiring information in forming a probability judgment before making a decision. This paper discusses the relevance of the stopping problem by way of an inquiry into the nature, properties and implications for rational decision making of Keynes's conception of evidential weight. It is argued that in practical choice situations the decision maker often decides where to stop the process of acquiring information by following Keynes's advice to consider the degree of completeness of the available information before making a decision. This method implies that the decision maker is able to arrive at an assessment of the dimension of what may be called her 'relevant ignorance'. By considering some examples of how the acquisition of new evidence may affect the decision maker's behaviour, it is argued that it is in fact possible to talk reasonably about relevant ignorance, or what are sometimes called 'unknown unknowns', and that this concept might explain a range of human behaviours. While this concept does not provide a rational principle to solve the stopping problem, it does provide a method of inquiry for dealing with a number of paradoxes not solvable within the Bayesian approach.

Suggested Citation

  • Alberto Feduzi, 2010. "On Keynes's conception of the Weight of Evidence," Post-Print hal-00870185, HAL.
  • Handle: RePEc:hal:journl:hal-00870185
    DOI: 10.1016/j.jebo.2010.05.002
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00870185
    as

    Download full text from publisher

    File URL: https://hal.archives-ouvertes.fr/hal-00870185/document
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kelsey, David, 1994. "Maxmin Expected Utility and Weight of Evidence," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 425-444, July.
    2. Dekel, Eddie & Lipman, Barton L. & Rustichini, Aldo, 1998. "Recent developments in modeling unforeseen contingencies," European Economic Review, Elsevier, vol. 42(3-5), pages 523-542, May.
    3. Fontana, Giuseppe & Gerrard, Bill, 2004. "A Post Keynesian theory of decision making under uncertainty," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 619-637, October.
    4. Craig R. Fox & Amos Tversky, 1995. "Ambiguity Aversion and Comparative Ignorance," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 585-603.
    5. J. Barkley Rosser, 2001. "Alternative Keynesian and Post Keynesian Perspective on Uncertainty and Expectations," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(4), pages 545-566, July.
    6. Feduzi, Alberto, 2007. "On the relationship between Keynes's conception of evidential weight and the Ellsberg paradox," Journal of Economic Psychology, Elsevier, vol. 28(5), pages 545-565, October.
    7. Bateman, Bradley W., 1987. "Keynes's Changing Conception of Probability," Economics and Philosophy, Cambridge University Press, vol. 3(01), pages 97-119, April.
    8. Camerer, Colin & Weber, Martin, 1992. "Recent Developments in Modeling Preferences: Uncertainty and Ambiguity," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 325-370, October.
    9. Modica, Salvatore & Rustichini, Aldo, 1999. "Unawareness and Partitional Information Structures," Games and Economic Behavior, Elsevier, vol. 27(2), pages 265-298, May.
    10. Winslow, E G, 1989. "Organic Interdependence, Uncertainty and Economic Analysis," Economic Journal, Royal Economic Society, vol. 99(398), pages 1173-1182, December.
    11. Anand, Paul, 1991. "The Nature of Rational Choice and The Foundations of Statistics," Oxford Economic Papers, Oxford University Press, vol. 43(2), pages 199-216, April.
    12. Runde, Jochen, 1990. "Keynesian Uncertainty and the Weight of Arguments," Economics and Philosophy, Cambridge University Press, vol. 6(02), pages 275-292, October.
    13. David Dequech, 1999. "Expectations and Confidence under Uncertainty," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(3), pages 415-430, March.
    14. Ramsey, Frank P., 1926. "Truth and Probability," Histoy of Economic Thought Chapters,in: Braithwaite, R. B. (ed.), The Foundations of Mathematics and other Logical Essays, chapter 7, pages 156-198 McMaster University Archive for the History of Economic Thought.
    15. Cottrell, Allin, 1993. "Keynes's Theory of Probability and Its Relevance to His Economics: Three Theses," Economics and Philosophy, Cambridge University Press, vol. 9(01), pages 25-51, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    D81; B21; uncertainty; weight of evidence; decision making; Keynes;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00870185. 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: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.