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The weight of argument and non-additive measures: a note

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  • Marcello Basili

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  • Carlo Zappia

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Abstract

This note argues that a representation of the epistemic state of the individual through a non-additive measure provides a novel account of Keynes’s view of probability theory proposed in his Treatise on Probability. The paper shows, first, that Keynes’s “non-numerical probabilities” can be interpreted in terms of decisional weights and distorsions of the probability priors. Second, that the degree of non-additivity of the probability measure can account for the confidence in the assessment without any reference to a second order probability. And, third, that the criterion for decision making under uncertainty derived in the non-additive literature incorporates a measure of the degree of confidence in the probability assessment. The paper emphasises the Keynesian derivation of Ellsberg’s analysis: the parallel between Keynes and Ellsberg is deemed to be significant since Ellsberg’s insights represent the main starting point of the modern developments of decision theory under uncertainty and ambiguity.

Suggested Citation

  • Marcello Basili & Carlo Zappia, 2007. "The weight of argument and non-additive measures: a note," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 003, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
  • Handle: RePEc:usi:depfid:003
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    File URL: http://repec.deps.unisi.it/depfid/text3.pdf
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    References listed on IDEAS

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    8. Jürgen Eichberger & David Kelsey, 1999. "E-Capacities and the Ellsberg Paradox," Theory and Decision, Springer, vol. 46(2), pages 107-138, April.
    9. Itzhak Gilboa & David Schmeidler, 1992. "Additive Representation of Non-Additive Measures and the Choquet Integral," Discussion Papers 985, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Ghirardato, Paolo & Maccheroni, Fabio & Marinacci, Massimo, 2004. "Differentiating ambiguity and ambiguity attitude," Journal of Economic Theory, Elsevier, vol. 118(2), pages 133-173, October.
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    Cited by:

    1. Carlo Zappia, 2008. "Non-Bayesian decision theory ante-litteram: the case of G. L. S. Shackle," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0408, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.

    More about this item

    Keywords

    uncertainty; probabilities; Keynes.;

    JEL classification:

    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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