Subjective Probability Does Not Exist

Asad Zaman
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Asad Zaman: Pakistan Institute of Development Economics, Islamabad

No 2017:152, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: We show that the rationality arguments used to establish the existence of subjective probabilities depend essentially on the identification of acting-as-ifyou-believe and actually believing. We show that these two ideas, the pretense of knowledge about probabilities, and actual knowledge about probabilities, can easily be distinguished outside the restricted context of choice over special types of lotteries. When making choices over Savage-type lotteries, rational agents will act as if they know their subjective probabilities for uncertain events, but they will reveal their ignorance in other decision making contexts. This means that subjective probabilities cannot be assumed to exist, except when there is objective warrant for them.

JEL-codes: B40 C11 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2017
New Economics Papers: this item is included in nep-mic and nep-upt
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