Red herrings: Some thoughts on the meaning of zero-probability events and mathematical modeling

Kicking off the discussion following Savage's presentation at the 1952 Paris colloquium, Arrow raised what he considered to be a difficulty with the intuitive interpretation of Savage's theorem. It suggests that decision makers strictly prefer betting on an event of measure zero over betting on a proper subset of that event. Within the realm of the revealed-preference methodology and limited verifiability, Arrow's difficulty is a red herring: the problem he poses has its origin in the technical aspects of Savage's model and not in its substantive aspect.