Bayes Without Bernoulli: Simple Conditions for Probabilistically Sophisticated Choice
In 1963, Anscombe and Aumann demonstrated that the introduction of an objective randomizing device into the Savage setting of subjective uncertainty considerably simplified the derivation of subjective probability from a decision maker's preferences over uncertain bets. The purpose of this paper is to present a more general derivation of classical subjective probability in such a framework, which neither assumes nor implies that the individual's risk preferences necessarily conform to the expected utility principle. We argue that the essence of "Bayesian rationality" is the assignment, correct manipulation, and proper updating of subjective event probablities when evaluating and comparing uncertain prospects, regardless of whether attitudes toward risk satisfy the expected utility property.
Year of publication: |
1994
|
---|---|
Authors: | Machina, Mark J. ; Schmeidler, David |
Publisher: |
Evanston, IL : Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science |
Saved in:
freely available
Series: | Discussion Paper ; 1088 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | hdl:10419/221445 [Handle] RePEc:nwu:cmsems:1088 [RePEc] |
Source: |
Persistent link: https://www.econbiz.de/10012235901
Saved in favorites
Similar items by person
-
A More Robust Definition of Subjective Probability
Machina, Mark J., (1990)
-
Bayes Without Bernoulli: Simple Conditions for Probabilistically Sophisticated Choice
Machina, Mark J., (1994)
-
A more robust definition of subjective probability
Machina, Mark J., (1992)
- More ...