Probabilistic Sophistication and Stochastic Monotonicity in the Savage Framework

Simon Grant, Hatice Ozsoy and Ben Polak ()
Additional contact information
Hatice Ozsoy: Rice University
Ben Polak: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/benjamin-polak

No 1621, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Machina & Schmeidler (1992) show that probabilistic sophistication can be obtained in a Savage setting without imposing expected utility by dropping Savage's axiom P2 (sure-thing principle) and strengthening his axiom P4 (weak comparative probability). Their stronger axiom, however, embodies a degree of separability analogous to P2. In this note, we obtain probabilistic sophistication using Savage's original axiom P4 and a weaker analog of Savage's P2.

Keywords: Subjective probability; Probabilistic sophistication, Stochastic monotonicity, Sure-thing principle, Cumulative dominance (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2007-08
New Economics Papers: this item is included in nep-upt
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Related works:
Journal Article: Probabilistic sophistication and stochastic monotonicity in the Savage framework (2008)
Working Paper: Probabilistic Sophistication and Stochastic Monotonicity in the Savage Framework (2007)
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