The Weight of Argument and Non-Additive Measures: A Note
DEPFID Working Paper No. 3/2007
30 Pages Posted: 13 Jul 2007 Last revised: 24 Feb 2008
Date Written: December 1, 2007
This note argues that a representation of the epistemic state of the individual through a non-additive measure provides a novel account of Keynes's view of probability theory proposed in his Treatise on Probability. The paper shows, first, that Keynes's "non-numerical probabilities" can be interpreted in terms of decisional weights and distorsions of the probability priors. Second, that the degree of non-additivity of the probability measure can account for the confidence in the assessment without any reference to a second order probability. And, third, that the criterion for decision making under uncertainty derived in the non-additive literature incorporates a measure of the degree of confidence in the probability assessment. The paper emphasises the Keynesian derivation of Ellsberg's analysis: the parallel between Keynes and Ellsberg is deemed to be significant since Ellsberg's insights represent the main starting point of the modern developments of decision theory under uncertainty and ambiguity.
Keywords: uncertainty, probabilities, Keynes
JEL Classification: B21, D81
Suggested Citation: Suggested Citation