Is It Always Rational to Satisfy Savage's Axioms?

Itzhak Gilboa, Andrew Postlewaite and David Schmeidler

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Abstract: This note argues that, under some circumstances, it is more rational not to behave in accordance with a Bayesian prior than to do so. The starting point is that in the absence of information, choosing a prior is arbitrary. If the prior is to have meaningful implications, it is more rational to admit that one does not have sufficient information to generate a prior than to pretend that one does. This suggests a view of rationality that requires a compromise between internal coherence and justification, similarly to compromises that appear in moral dilemmas. Finally, it is argued that Savage's axioms are more compelling when applied to a naturally given state space than to an analytically constructed one, in the latter case, it may be more rational to violate the axioms than to be Bayesian.

Keywords: Studies; Economic theory; Probability; Philosophy (search for similar items in EconPapers)
Date: 2009-11
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Citations: View citations in EconPapers (47)

Published in Economics and Philosophy, 2009, Vol.25,nº3, pp.285-297. ⟨10.1017/S0266267109990241⟩

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Related works:
Journal Article: IS IT ALWAYS RATIONAL TO SATISFY SAVAGE'S AXIOMS? (2009)
Working Paper: Is It Always Rational to Satisfy Savage’s Axioms? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00493170

DOI: 10.1017/S0266267109990241

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