Sorted by New


The Savage theorem and the Ellsberg paradox

This is not a reply to this comment. I wanted to comment on the article itself, but I can't find the comment box under the article itself.

According to Robin Pope's article, "Attractions to and Repulsions from Chance," section VII, Savage's sure-thing principle is not his P2, although it is easily confused with it. The sure-thing principle says that if you do prefer (A but not B) over (B but not A), then you ought to prefer A over B. That is, in case of a violation of P2, you should resolve it by revising the latter preference (the one between bets with overlapping outcomes), not the former. This is apparently how Savage revised his preferences on the Allais paradox to align them with EU theory.

The article:section is in the book "Game Theory, Experience, and Rationality, Foundations of Social Sciences, Economics and Ethics, in honor of J.C. Harsanyi," pp 102-103.