Knightian Decision Theory: Part 1

Truman F. Bewley ()
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Truman F. Bewley: Cowles Foundation, Yale University, https://economics.yale.edu/people/emeritus/truman-f-bewley

No 807, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: A theory of choice under uncertainty is proposed which removes the completeness assumption from the Anscombe-Aumann formulation of Savage's theory and introduces an inertia assumption. The inertia assumption is that there is such a thing as the status quo and an alternative is accepted only if it is preferred to the status quo. This theory is one way of giving rigorous expression to Frank Knight's distinction between risk and uncertainty.

Keywords: Decision theory; Knight; theory of choice; uncertainty; inertia assumption (search for similar items in EconPapers)
Pages: 54 pages
Date: 1986-11
Note: CFP 1053
References: Add references at CitEc
Citations: View citations in EconPapers (85)

Published in Decisions in Economics and Finance (2002), 25(2): 79-110

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