Bayesian beliefs with stochastic monotonicity: An extension of Machina and Schmeidler

Date

2006

Authors

Grant, Simon
Polak, Ben

Journal Title

Journal ISSN

Volume Title

Publisher

Academic Press

Abstract

Machina and Schmeidler show that the probabilistic sophistication can be obtained in an Anscombe–Aumann setting without imposing expected utility by maintaining stochastic monotonicity and adding a new axiom loosely analogous to Savage's P4. This analogous axiom, however, is very strong. In this note, we obtain probabilistic sophistication using a weaker (and more natural) analog of Savage's P4. Stochastic monotonicity is sufficient to bridge the gap, where Anscombe and Aumman use independence twice, we use stochastic monotonicity twice.

Description

Keywords

Anscombe-Aumann, Horse/roulette lotteries, Independence, Stochastic monotonicity, Subjective probability

Citation

Source

Journal of Economic Theory

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

DOI

10.1016/j.jet.2005.03.006

Restricted until

2099-12-31