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The Bayesian Fallacy: Distinguishing Four Kinds of Beliefs

Listed author(s):
  • Khalil, Elias

This paper distinguishes among four kinds of beliefs: conviction, confidence, perception, conception. Conviction concerns self-ability:“I can build these stairs.” Confidence also concerns the self—ut focuses on the assertion of will in the face of weakness of will. Perception is about the environment such as weather prediction. Conception is also about the environment—but usually couched with context. While convictions are noncognitive and nonevidential beliefs, the other beliefs are either cognitive, evidential, or both. This paper uses the terms “cognition” and “evidentiality” as axes to distinguish the four beliefs. While “cognitive beliefs” are about one’s environment, “noncognitive beliefs” are about one’s self. While the cognitive/noncognitive divide is unconventional, it generates a payoff in light of the evidentiality axis. While “evidential beliefs” are correctable via Bayes’s rule, “nonevidential beliefs” are not. However, when the nonevidential belief is about the environment, the evidence can at least make the belief more (or less) warranted—where “warrantability” is a weaker criterion than “correctability.” And when the nonevidential belief is about the self, i.e., a conviction, the evidence cannot even make the belief more (or less) warranted. The evidence itself develops when one tries to test a conviction. This paper highlights that convictions are the basis of tenacity—crucial for entrepreneurship and economic growth. This paper further demonstrates how three major theories of action—standard rationality, normative theory, and procedural rationality—fail to distinguish the four kinds of beliefs. They, hence, commit, although in different ways, a set of confusions called here the “Bayesian fallacy.”

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File URL: https://mpra.ub.uni-muenchen.de/8474/1/MPRA_paper_8474.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8474.

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Date of creation: 26 Apr 2008
Date of revision: 26 Apr 2008
Handle: RePEc:pra:mprapa:8474
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  1. Jörg Rieskamp & Jerome R. Busemeyer & Barbara A. Mellers, 2006. "Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 631-661, September.
  2. J. M. Keynes, 1937. "The General Theory of Employment," The Quarterly Journal of Economics, Oxford University Press, vol. 51(2), pages 209-223.
  3. David M. Grether, 1980. "Bayes Rule as a Descriptive Model: The Representativeness Heuristic," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 537-557.
  4. McCloskey,Deirdre N., 1994. "Knowledge and Persuasion in Economics," Cambridge Books, Cambridge University Press, number 9780521436038.
  5. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
  6. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  7. Elias L. Khalil, 1995. "Has Economics Progressed? Rectilinear, Historicist, Universalist, and Evolutionary Historiographies," History of Political Economy, Duke University Press, vol. 27(1), pages 43-87, Spring.
  8. Goldsmith, Arthur H & Veum, Jonathan R & Darity, William, Jr, 1997. "The Impact of Psychological and Human Capital on Wages," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 815-829, October.
  9. Jean-Pierre Dupuy, 2004. "Intersubjectivity and Embodiment," Journal of Bioeconomics, Springer, vol. 6(3), pages 275-294, 09.
  10. Armin Falk & Markus Knell, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 417-435, October.
  11. Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
  12. McCloskey,Deirdre N., 1994. "Knowledge and Persuasion in Economics," Cambridge Books, Cambridge University Press, number 9780521434751.
  13. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, July.
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