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Keynes's Treatise on Probability at 100 Years: Its Most Enduring Message

Carlo Zappia ()

No 2021-36, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: On the occasion of the assessment of the enduring influence of Keynes's Treatise on Probability at 100 years, this paper focuses on its relevance for decision theory. The paper places emphasis on Keynes's introduction of the epistemic notion of probabilities that often are non-numerical, as a theoretical object intended to replace frequency probabilities. The paper argues that, as non-numerical probabilities make it possible to deal with uncertainty as if individuals were endowed with interval-valued probabilities, Keynes's 1921 critique of contemporary frequency probability theory turns out to be relevant also with regard to the yet to be established subjective probability theory. Although non-numerical probabilities were used by Keynes to criticize the contemporary application of probability to conduct, it must be acknowledged that, still today, they may constitute an appropriate tool for decision-making when confronting uncertainty, as he hinted at in his late 1930s correspondence with Hugh Townshend.

Keywords: probability; uncertainty; decision-making (search for similar items in EconPapers)
JEL-codes: B21 B31 D81 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2021-10
New Economics Papers: this item is included in nep-cwa, nep-his, nep-hme, nep-hpe, nep-ore, nep-pke, nep-rmg and nep-upt
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