Knightian Uncertainty Meets Ranking Theory
Wolfgang Spohn (wolfgang.spohn@uni-konstanz.de)
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Wolfgang Spohn: Universität Konstanz
Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2017, vol. 34, issue 4, No 4, 293-311
Abstract:
Abstract Knightian uncertainty is not a special kind of uncertainty; it’s just uncertainty. And it raises the issue how we may model uncertainty. The paper gives a brief overview over non-probabilistic measures of uncertainty, starting with Shackle’s functions of potential surprise and mentioning non-additive probabilities, Dempster–Shafer belief functions, etc. It arrives at an explanation of ranking theory as a further uncertainty model and emphasizes its additional epistemological virtues, which consist in a representation of belief, i.e., of taking something to be true (which is the basic notion of traditional epistemology and admits of degrees as well) and a full dynamic account of those degrees. The final section addresses the issue how these uncertainty measures and in particular ranking theory may be used within a decision theoretic context.
Keywords: Knightian uncertainty; Functions of potential surprise; Baconian probability; Non-additive probability; Ranking theory; Belief; Decision theory (search for similar items in EconPapers)
JEL-codes: B21 B50 D81 D83 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s41412-017-0060-5
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