The emergence of "fifty-fifty" probability judgements in a conditional Savage world
This paper models the empirical phenomenon of persistent Â“Â…fifty-Â…fifty Â”probability judgements within a dynamic non-additive Savage framework. To this purpose I construct a model of Bayesian learning such that an agentÂ’s probability judgement is characterized as the solution to a Choquet expected utility maximization problem with respect to a conditional neo-additive capacity. Only for the non-generic case in which this capacity degenerates to an additive probability measure, the agentÂ’s probability judgement coincides with the familiar estimate of a Bayesian statistician who minimizes a quadratic (squared error) loss function with respect to an additive posterior distribution. In contrast, for the generic case in which the capacity is non-additive, the agentÂ’s probability judgements converge through Bayesian learning to the unique fuzzy probability measure that assigns a 0:5 probability to any uncertain event.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Newlands on Main, F0301 3rd Floor Mariendahl House, cnr Campground and Main Rds, Claremont, 7700 Cape Town|
Phone: 021 671-3980
Fax: +27 21 671 3912
Web page: http://www.econrsa.org/
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.:
- Gilboa Itzhak & Schmeidler David, 1993.
"Updating Ambiguous Beliefs,"
Journal of Economic Theory,
Elsevier, vol. 59(1), pages 33-49, February.
- Marcello Basili & Alain Chateauneuf, 2011. "Extreme events and entropy: A multiple quantile utility model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00685405, HAL.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- David Schmeidler, 1989.
"Subjective Probability and Expected Utility without Additivity,"
Levine's Working Paper Archive
7662, David K. Levine.
- Schmeidler, David, 1989. "Subjective Probability and Expected Utility without Additivity," Econometrica, Econometric Society, vol. 57(3), pages 571-87, May.
- Michael D. Hurd, 2009. "Subjective Probabilities in Household Surveys," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 543-564, 05.
- Grant, Simon & Chateauneuf, A. & Eichberger, J., 2002.
"Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities,"
2002-10, Rice University, Department of Economics.
- Chateauneuf, Alain & Eichberger, Jurgen & Grant, Simon, 2007. "Choice under uncertainty with the best and worst in mind: Neo-additive capacities," Journal of Economic Theory, Elsevier, vol. 137(1), pages 538-567, November.
- Chateauneuf, Alain & Eichberger, Jürgen & Grant, Simon, 2003. "Choice under uncertainty with the best and worst in mind : neo-additive capacities," Papers 03-10, Sonderforschungsbreich 504.
- Chateauneuf, Alain & Eichberger, Jürgen & Grant, Simon, 2003. "Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities," Sonderforschungsbereich 504 Publications 03-10, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Alain Chateauneuf & Jürgen Eichberger & Simon Grant, 2007. "Choice under uncertainty with the best and worst in mind: neo-additive capacities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00271279, HAL.
- Cohen, M. & Gilboa, I. & Jaffray, J.Y. & Schmeidler, D., 2000. "An experimental study of updating ambiguous beliefs," Risk, Decision and Policy, Cambridge University Press, vol. 5(02), pages 123-133, June.
- Gilboa, Itzhak, 1987.
"Expected utility with purely subjective non-additive probabilities,"
Journal of Mathematical Economics,
Elsevier, vol. 16(1), pages 65-88, February.
- Itzhak Gilboa, 1987. "Expected Utility with Purely Subjective Non-Additive Probabilities," Post-Print hal-00756291, HAL.
- Siniscalchi, Marciano, 2011.
"Dynamic choice under ambiguity,"
Econometric Society, vol. 6(3), September.
- Kleinjans, Kristin J. & van Soest, Arthur, 2010. "Nonresponse and Focal Point Answers to Subjective Probability Questions," IZA Discussion Papers 5272, Institute for the Study of Labor (IZA).
- Manski, Charles F. & Molinari, Francesca, 2010. "Rounding Probabilistic Expectations in Surveys," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(2), pages 219-231.
- Colin F. Camerer, 2007. "Neuroeconomics: Using Neuroscience to Make Economic Predictions," Economic Journal, Royal Economic Society, vol. 117(519), pages C26-C42, 03.
- Wakker, Peter & Tversky, Amos, 1993. "An Axiomatization of Cumulative Prospect Theory," Journal of Risk and Uncertainty, Springer, vol. 7(2), pages 147-75, October.
- Eichberger, Jurgen & Grant, Simon & Kelsey, David, 2007.
"Updating Choquet beliefs,"
Journal of Mathematical Economics,
Elsevier, vol. 43(7-8), pages 888-899, September.
- Sarin, Rakesh K & Wakker, Peter, 1992. "A Simple Axiomatization of Nonadditive Expected Utility," Econometrica, Econometric Society, vol. 60(6), pages 1255-72, November.
- Cesaltina Pacheco Pires, 2002. "A Rule For Updating Ambiguous Beliefs," Theory and Decision, Springer, vol. 53(2), pages 137-152, September.
When requesting a correction, please mention this item's handle: RePEc:rza:wpaper:291. 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: (Charles Tanton)
If references are entirely missing, you can add them using this form.