Probabilistic sophistication and stochastic monotonicity in the Savage framework

Simon Grant, Hatice Özsoy and Ben Polak

Mathematical Social Sciences, 2008, vol. 55, issue 3, 371-380

Abstract: Machina and Schmeidler [Machina, M., Schmeidler, D., 1992. A more robust definition of subjective probability. Econometrica 60, 745-780] 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.

Date: 2008
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Related works:
Working Paper: Probabilistic Sophistication and Stochastic Monotonicity in the Savage Framework (2007)
Working Paper: Probabilistic Sophistication and Stochastic Monotonicity in the Savage Framework (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:55:y:2008:i:3:p:371-380

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