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Probabilistic sophistication and stochastic monotonicity in the Savage framework

Grant, Simon; Oszoy, Hatic; Polak, Ben

Description

Machina and Schmeidler [Machina, M., Schmeidler, D., 1992. A more robust definition of subjective probability. Econometrica 60, 745–780] 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...[Show more]

CollectionsANU Research Publications
Date published: 2008
Type: Journal article
URI: http://hdl.handle.net/1885/281494
Source: Mathematical Social Sciences
DOI: 10.1016/j.mathsocsci.2007.10.002

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