On the decision under uncertainty in economic theory

Aldo Montesano ()
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Aldo Montesano: Bocconi University

International Review of Economics, 2025, vol. 72, issue 2, No 11, 12 pages

Abstract: Abstract Two approaches to introducing agents’ preferences under uncertainty are indicated. The approach followed by the general theory, from Pareto’s Manual onward, places preferences on possible choices among the “data” of the theory. Therefore, the representation of uncertainty’s influence on preferences is unnecessary. Even in the absence of this representation, it is possible to obtain from the preferences of the decision-maker a measure of his/her subjective probabilities through the marginal reservation prices for the purchase or sale of a bet on the event to which the probability refers and also have an indication on the uncertainty aversion of the agent under examination. Some comments on the use of preferences and decisions under uncertainty in economic theory are presented in the conclusion.

Keywords: Uncertainty; Preferences; Decisions; Price-probabilities; Uncertainty aversion (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s12232-025-00501-1

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