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

See all articles by Marcello Basili

Marcello Basili

University of Siena - Dipartimento di Economia Politica; University of Siena - Department of Economic Policy, Finance and Development

Carlo Zappia

University of Siena - Department of Economics and Statistics

Date Written: December 1, 2007

Abstract

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

Basili, Marcello and Zappia, Carlo, The Weight of Argument and Non-Additive Measures: A Note (December 1, 2007). DEPFID Working Paper No. 3/2007, Available at SSRN: https://ssrn.com/abstract=997429 or http://dx.doi.org/10.2139/ssrn.997429

Marcello Basili

University of Siena - Dipartimento di Economia Politica ( email )

Piazza San Francesco 7
Siena, 53100
Italy

University of Siena - Department of Economic Policy, Finance and Development ( email )

Piazza San Francesco, 7
Siena, 53100
Italy

Carlo Zappia (Contact Author)

University of Siena - Department of Economics and Statistics ( email )

Piazza San Francesco 7
Siena, Siena 53100
Italy

HOME PAGE: http://docenti-deps.unisi.it/carlozappia/

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