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Shackle versus Savage: non-probabilistic alternatives to subjective probability theory in the 1950s

Author

Listed:
  • Carlo Zappia

    ()

  • Marcello Basili

    ()

Abstract

G.L.S Shackle’s rejection of the probability tradition stemming from Knight's definition of uncertainty was a crucial episode in the development of modern decision theory. A set of methodological statements characterizing Shackle’s stance, abandoned for long, especially after Savage’s Foundations, have been re-discovered and are at the basis of current non-expected utility theories, in particular of the non-additive probability approach to decision making. This paper examines the discussion between Shackle and his critics in the 1950s. Drawing on Shackle’s papers housed at Cambridge University Library as well as on printed matter, we show that some critics correctly understood two aspects of Shackle’s theory which are of the utmost importance in our view: the non-additive character of the theory and the possibility of interpreting Shackle’s ascendancy functions as a specific distortion of the weighting function of the decision maker. It is argued that Shackle neither completely understood criticisms nor appropriately developed suggestions put forward by scholars like Kenneth Arrow, Ward Edwards, Nicholas Georgescu- Roegen. Had he succeeded in doing so, we contend, his theory might have been a more satisfactory alternative to Savage’s theory than it actually was.

Suggested Citation

  • Carlo Zappia & Marcello Basili, 2005. "Shackle versus Savage: non-probabilistic alternatives to subjective probability theory in the 1950s," Department of Economics University of Siena 452, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:452
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    File URL: http://repec.deps.unisi.it/quaderni/452.pdf
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    Keywords

    uncertainty; decision theory; non-additive measures;

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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