Probabilistic Sophistication and Stochastic Monotonicity in the Savage Framework

Machina & Schmeidler (1992) show that probabilistic sophistication can be obtained in a Savage setting without imposing expected utility by dropping Savage's axiom P2 (sure-thing principle) and strengthening his axiom P4 (weak comparative probability). Their stronger axiom, however, embodies a degree of separability analogous to P2. In this note, we obtain probabilistic sophistication using Savage's original axiom P4 and a weaker analog of Savage's P2.

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Year of publication:	2007-08
Authors:	Grant, Simon ; Ozsoy, Hatice ; Polak, Ben
Institutions:	Cowles Foundation for Research in Economics, Yale University
Subject:	Subjective probability \| Probabilistic sophistication \| Stochastic monotonicity \| Sure-thing principle \| Cumulative dominance

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Extent:	application/pdf
Series:	Cowles Foundation Discussion Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	The price is None Number 1621 15 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005464036