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Savage’s response to Allais as Broomean reasoning

Author

Listed:
  • Franz Dietrich

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)

  • Antonios Staras

    (Cardiff University)

  • Robert Sugden

    (UEA - University of East Anglia [Norwich])

Abstract

Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that he had made an error. We examine the formal structure of Savage's ‘error-correcting' reasoning in the light of (i) behavioural economists' claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) Broome's critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage's reasoning is not vulnerable to Broome's critique, but does not provide support for the view that behavioural scientists can identify and counteract errors in people's choices or preferences.

Suggested Citation

  • Franz Dietrich & Antonios Staras & Robert Sugden, 2021. "Savage’s response to Allais as Broomean reasoning," PSE-Ecole d'économie de Paris (Postprint) hal-03261452, HAL.
    • Handle: RePEc:hal:pseptp:hal-03261452
    DOI: 10.1080/1350178X.2020.1857424
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    References listed on IDEAS

    as
    1. Sophie Jallais & Pierre-Charles Pradier, 2005. "The Allais Paradox and its Immediate Consequences for Expected Utility Theory," Post-Print halshs-00311396, HAL.
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    13. Franz Dietrich & Antonios Staras & Robert Sugden, 2018. "A Broomean model of rationality and reasoning," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01904091, HAL.
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    Cited by:

    1. Baccelli, Jean & Hartmann, Lorenz, 2023. "The Sure-Thing Principle," Journal of Mathematical Economics, Elsevier, vol. 109(C).
    2. Steven J. Humphrey & Nadia-Yasmine Kruse, 2024. "Who accepts Savage’s axiom now?," Theory and Decision, Springer, vol. 96(1), pages 1-17, February.

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    More about this item

    Keywords

    Savage; Allais Paradox; Broome; reasoning; behavioural economics;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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