A Rehabilitation of the Principle of Insufficient Reason
It is shown that two of the axioms necessary for the expected utility rule imply the Principle of Insufficient Reason. Whenever a decision maker knows the possible states of the world, but completely lacks information about the plausibility of each single state, he has to behave as if all states occurred with the same objective probability, known with certainty. The result is applied to decision trees and used to solve a problem formulated by Savage in order to discredit the classical version of the Principle of Insufficient Reason.
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|Date of creation:||1980|
|Date of revision:|
|Publication status:||Published in The Quarterly Journal of Economics 3 94(1980): pp. 493|
|Contact details of provider:|| Postal: |
Web page: http://www.vwl.uni-muenchen.de
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