Evidence Theory: A Mathematical Framework for Unpredictable Hypotheses

22 Pages Posted: 8 Nov 2004

See all articles by Guido Fioretti

Guido Fioretti

Complex Systems Centre, University of Siena; International Centre for Economic Research (ICER)

Abstract

Shafer's evidence theory is a branch of the mathematics of uncertain reasoning that allows for novel possibilities to be conceived by a decision-maker. Many of its findings exhibit striking similarities with an alternative decision theory put forward by Shackle in the 1950s, before expected utility maximization monopolized the scene. Evidence theory does not attempt to formalize the emergence of novelties, but it is a suitable framework for reconstructing the formation of beliefs when novelties appear. An application to decision-making in the biotech and pharmaceutical industries illustrates the potentialities of evidence theory, as well as its shortcomings.

Suggested Citation

Fioretti, Guido, Evidence Theory: A Mathematical Framework for Unpredictable Hypotheses. Available at SSRN: https://ssrn.com/abstract=602010

Guido Fioretti (Contact Author)

Complex Systems Centre, University of Siena ( email )

Via Banchi di Sotto, 55
I-53100 Siena
Italy

International Centre for Economic Research (ICER)

Villa Gualino
Viale Settimio Severo, 63
10133 Torino
Italy

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