Unknowable states and choice-based definitions of subjective probabilities

Edi Karni

Economics Letters, 2008, vol. 99, issue 3, pages 534-536

Abstract: This paper exposes a difficulty in applying the revealed preference methodology to the definition of subjective probabilities. It shows that in the presence of unknowable states it is impossible to provide choice-based foundations of prior probabilities in Bayes' theory.

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