Hostname: page-component-cd9895bd7-p9bg8 Total loading time: 0 Render date: 2024-12-28T04:25:37.941Z Has data issue: false hasContentIssue false
  • English
  • Français

CONFIDENCE IN BELIEFS AND RATIONAL DECISION MAKING

Published online by Cambridge University Press:  30 October 2018

Brian Hill Open the ORCID record for Brian Hill [Opens in a new window]
Brian Hill*
Affiliation:
GREGHEC, CNRS and HEC Paris, 1 rue de la Libération, 78351 Jouy-en-Josas, France. E-mail: hill@hec.fr. URL: www.hec.fr/hill.
Get access Rights & Permissions [Opens in a new window]

Abstract:

The standard, Bayesian account of rational belief and decision is often argued to be unable to cope properly with severe uncertainty, of the sort ubiquitous in some areas of policy making. This paper tackles the question of what should replace it as a guide for rational decision making. It defends a recent proposal, which reserves a role for the decision maker’s confidence in beliefs. Beyond being able to cope with severe uncertainty, the account has strong normative credentials on the main fronts typically evoked as relevant for rational belief and decision. It fares particularly well, we argue, in comparison to other prominent non-Bayesian models in the literature.

Keywords

confidencedecision under uncertaintybeliefrationality
Type
Article
Information
Economics & Philosophy , Volume 35 , Issue 2 , July 2019 , pp. 223 - 258
Copyright
Copyright © Cambridge University Press 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abdellaoui, M., Baillon, A., Placido, L. and Wakker, P. P.. 2011. The rich domain of uncertainty: source functions and their experimental implementation. American Economic Review 101: 695–723.Google Scholar
Anscombe, F. J. and Aumann, R. J.. 1963. A definition of subjective probability. Annals of Mathematical Statistics 34: 199–205.Google Scholar
Armendt, B. 2010. Stakes and beliefs. Philosophical Studies 147: 71–87.Google Scholar
Arrow, K. J. 1971. Essays in the Theory of Risk Bearing. Chicago. IL: Markham Publishing.Google Scholar
Augustin, T., Coolen, F. P., de Cooman, G. and Troffaes, M. C.. 2014. Introduction to Imprecise Probabilities. New York, NY: Wiley.Google Scholar
Berger, J. O. 1985. Statistical Decision Theory and Bayesian Analysis. New York, NY: Springer.Google Scholar
Bewley, T. F. 2002. Knightian decision theory. Part I. Decisions in Economics and Finance 25: 79–110.Google Scholar
Bradley, R. 2009. Revising incomplete attitudes. Synthese 171: 235–256.Google Scholar
Bradley, R. 2016. Ellsberg's paradox and the value of chances. Economics and Philosophy 32: 231–248.Google Scholar
Bradley, R. 2017. Decision Theory with a Human Face. Cambridge: Cambridge University Press.Google Scholar
Bradley, S. and Steele, K.. 2014. Uncertainty, learning, and the “problem” of dilation. Erkenntnis 79: 1287–1303.Google Scholar
Bradley, R. and Steele, K.. 2015. Making climate decisions. Philosophy Compass 10: 799–810.Google Scholar
Bradley, S. and K. Steele, K. 2016. Can free evidence be bad? Value of information for the imprecise probabilist. Philosophy of Science 83: 1–28.Google Scholar
Chateauneuf, A. and Faro, J. H.. 2009. Ambiguity through confidence functions. Journal of Mathematical Economics 45: 535–558.Google Scholar
Cox, L. A. T. 2012. Confronting deep uncertainties in risk analysis. Risk Analysis 32: 1607–1629.Google Scholar
Cozic, M. and Hill, B.. 2015. Representation theorems and the semantics of decision theoretic concepts. Journal of Economic Methodology 22: 292–311.Google Scholar
de Finetti, B. 1937. La Prévision: ses lois logiques, ses sources subjectives. Annales de l'Institut Henri Poincaré 7: 1–68.Google Scholar
Dempster, A. P. 1967. Upper and lower probabilities induced by a multivalued mapping. Annals of Mathematical Statistics 38: 325–339.Google Scholar
Ellsberg, D. 1961. Risk, ambiguity, and the savage axioms. Quarterly Journal of Economics 75: 643–669.Google Scholar
Ergin, H. and Gul, F.. 2009. A theory of subjective compound lotteries. Journal of Economic Theory 144: 899–929.Google Scholar
Fox, C. R. and Tversky, A.. 1995. Ambiguity aversion and comparative ignorance. Quarterly Journal of Economics 110: 585–603.Google Scholar
Gajdos, T., Hayashi, T., Tallon, J.-M. and Vergnaud, J.-C.. 2008. Attitude toward imprecise information. Journal of Economic Theory 140: 27–65.Google Scholar
Gärdenfors, P. 1988. Knowledge in Flux: Modeling the Dynamics of Epistemic States. Cambridge, MA: MIT Press.Google Scholar
Gärdenfors, P. and Sahlin, N.-E.. 1982. Unreliable probabilities, risk taking, and decision making. Synthese 53: 361–386.Google Scholar
Ghirardato, P. and Marinacci, M.. 2002. Ambiguity made precise: a comparative foundation. Journal of Economic Theory 102: 251–289.Google Scholar
Gilboa, I. 2009. Theory of Decision Under Uncertainty. Econometric Society Monographs. Cambridge: Cambridge University Press.Google Scholar
Gilboa, I. and Marinacci, M.. 2013. Ambiguity and the Bayesian paradigm. In Advances in Economics and Econometrics: Theory and Applications. Tenth World Congress of the Econometric Society.Google Scholar
Gilboa, I. and Schmeidler, D.. 1989. Maxmin expected utility with non-unique prior. Journal of Mathematical Economics 18: 141–153.Google Scholar
Gilboa, I., Postlewaite, A. and Schmeidler, D.. 2009. Is it always rational to satisfy Savage's axioms? Economics and Philosophy 25: 285–296.Google Scholar
Gilboa, I., Maccheroni, F., Marinacci, M. and Schmeidler, D.. 2010. Objective and subjective rationality in a multiple prior model. Econometrica 78: 755–770.Google Scholar
Grove, A. 1988. Two modelings for theory change. Journal of Philosophical Logic 17: 157–170.Google Scholar
Hájek, A. 2008. Dutch book arguments. In The Oxford Handbook of Rational and Social Choice, ed. Anand, P., Pattanaik, P. and Puppe, C., 173–196. Oxford: Oxford University Press.Google Scholar
Halpern, J. Y. 2003. Reasoning about Uncertainty. Cambridge, MA: MIT Press.Google Scholar
Hansen, L. P. and Sargent, T. J.. 2001. Robust control and model uncertainty. American Economic Review 91: 60–66.Google Scholar
Hill, B. 2013. Confidence and decision. Games and Economic Behavior 82: 675–692.Google Scholar
Hill, B. 2015a. Confidence as a Source of Deferral. Technical Report ECO/SCD- 2014-1060, HEC Paris. <https://doi.org/10.2139/ssrn.2508192>..>Google Scholar
Hill, B. 2015b. Dynamic Consistency and Ambiguity: A Reappraisal. Technical Report ECO/SCD-2013-983, HEC Paris. <https://doi.org/10.2139/ssrn.2268373>..>Google Scholar
Hill, B. 2016. Incomplete preferences and confidence. Journal of Mathematical Economics 65: 83–103.Google Scholar
Joyce, J. M. 1999. The Foundations of Causal Decision Theory. Cambridge: Cambridge University Press.Google Scholar
Joyce, J. M. 2011. A defense of imprecise credences in inference and decision making. In Oxford Studies in Epistemology, Vol. 4, ed. Gendler, T. S. and Hawthorne, J.. Oxford: Oxford University Press.Google Scholar
Klibanoff, P., Marinacci, M. and Mukerji, S.. 2005. A smooth model of decision making under ambiguity. Econometrica 73: 1849–1892.Google Scholar
Lempert, R. J. and Collins, M. T.. 2007. Managing the risk of uncertain threshold responses: comparison of robust, optimum, and precautionary approaches. Risk Analysis 27: 1009–1026.Google Scholar
Levi, I. 1974. On indeterminate probabilities. Journal of Philosophy 71: 391–418.Google Scholar
Levi, I. 1986. Hard Choices. Decision Making under Unresolved Conflict. Cambridge: Cambridge University Press.Google Scholar
Maccheroni, F., Marinacci, M. and Rustichini, A.. 2006. Ambiguity aversion, robustness, and the variational representation of preferences. Econometrica 74: 1447–1498.Google Scholar
Machina, M. J. and Siniscalchi, M.. 2014. Ambiguity and ambiguity aversion. In Handbook of the Economics of Risk and Uncertainty, Vol. 1, 729–807. Amsterdam: Elsevier B.V.Google Scholar
Marinacci, M. 2015. Model uncertainty. Journal of the European Economic Association 13: 1022–1100.Google Scholar
Millner, A., Dietz, S. and Heal, G.. 2012. Scientific ambiguity and climate policy. Environmental and Resource Economics 55: 21–46.Google Scholar
Mongin, P. 1995. Consistent Bayesian aggregation. Journal of Economic Theory 66: 313–351.Google Scholar
Morgan, M. G. 2014. Use (and abuse) of expert elicitation in support of decision making for public policy. Proceedings of the National Academy of Sciences USA 111: 7176–7184.Google Scholar
Nau, R. F. 1992. Indeterminate probabilities on finite sets. Annals of Statistics 20: 1737–1767.Google Scholar
Nau, R. F. 2006. Uncertainty aversion with second-order utilities and probabilities. Management Science 52: 136–145.Google Scholar
Pratt, J. W. 1964. Risk aversion in the small and in the large. Econometrica 32: 122–136.Google Scholar
Ramsey, F. P. 1931. Truth and probability. In The Foundations of Mathematics and Other Logical Essays. New York, NY: Harcourt, Brace and Co.Google Scholar
Savage, L. J. 1954. The Foundations of Statistics. New York, NY: Dover.Google Scholar
Schick, F. 1986. Dutch bookies and money pumps. Journal of Philosophy 83: 112–119.Google Scholar
Schmeidler, D. 1989. Subjective probability and expected utility without additivity. Econometrica 57: 571–587.Google Scholar
Segal, U. 1987. The Ellsberg paradox and risk aversion: an anticipated utility approach. International Economic Review 28: 175–202.Google Scholar
Seidenfeld, T. 1988. Decision theory without ‘independence’ or without ‘ordering’. Economics and Philosophy 4: 267–290.Google Scholar
Seo, K. 2009. Ambiguity and second-order belief. Econometrica 77: 1575–1605.Google Scholar
Shafer, G. 1976. A Mathematical Theory of Evidence. Princeton, NJ: Princeton University Press.Google Scholar
Siniscalchi, M. 2009. Two out of three ain't bad: a comment on ‘The Ambiguity Aversion Literature: A Critical Assessment’. Economics and Philosophy 25: 335–356.Google Scholar
Skyrms, B. 1977. Resiliency, propensities, and causal necessity. Journal of Philosophy 74: 704–713.Google Scholar
Skyrms, B. 1980. Higher order degrees of belief. In Prospects for Pragmatism. Essays in Memory of F. P. Ramsey, ed. Mellor, D. H., 17–25. Cambridge: Cambridge University Press.Google Scholar
Smith, C. 1961. Consistency in statistical inference and decision. Journal of the Royal Statistical Society, Series B 23: 1–37.Google Scholar
Smithson, M. 2014. Elicitation. In Introduction to Imprecise Probabilities, ed. Augustin, T., Coolen, F. P., de Cooman, G. and Troffaes, M. C., 318–328. Chichester: Wiley.Google Scholar
Strzalecki, T. 2011. Axiomatic foundations of multiplier preferences. Econometrica 79: 47–73.Google Scholar
Tversky, A. and Fox, C. R.. 1995. Weighing risk and uncertainty. Psychological Review 102: 269–283.Google Scholar
Wakker, P. P. 2010. Prospect Theory for Risk and Ambiguity. Cambridge: Cambridge University Press.Google Scholar
Walley, P. 1991. Statistical Reasoning with Imprecise Probabilities. London: Chapman and Hall.Google Scholar
Walley, P. 2000. Towards a unified theory of imprecise probability. International Journal of Approximate Reasoning 24: 125–148.Google Scholar
Weirich, P. 2001. Decision Space: Multidimensional Utility Analysis. Cambridge: Cambridge University Press.Google Scholar
Yaniv, I. and Foster, D. P.. 1995. Graininess of judgment under uncertainty: an accuracy-informativeness trade-off. Journal of Experimental Psychology: General 124: 424.Google Scholar
Yaniv, I. and Foster, D. P.. 1997. Precision and accuracy of judgmental estimation. Journal of Behavioral Decision Making 10: 21–32.Google Scholar