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A subjective spin on roulette wheels

Paolo Ghirardato (), Fabio Maccheroni, Massimo Marinacci and Marciano Siniscalchi

ICER Working Papers - Applied Mathematics Series from ICER - International Centre for Economic Research

Abstract: We provide a behavioral foundation to the notion of ‘mixture’ of acts, which is used to great advantage in he decision setting introduced by Anscombe and Aumann. Our construction allows one to formulate mixture-space axioms even in a fully sub-jective setting, without assuming the existence of randomizing devices. This simplifies the task of developing axiomatic models which only use behavioral data. Moreover, it is immune from the difficulty that agents may ‘distort’ the probabilities associated with randomizing devices. For illustration, we present simple subjective axiomatizations of some models of choice under uncertainty, including the maxmin expected utility model of Gilboa and Schmeidler, and Bewley’s model of choice with incomplete preferences.

Pages: 28 pages
Date: 2001-06, Revised 2001-08
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Related works:
Journal Article: A Subjective Spin on Roulette Wheels (2003)
Working Paper: A Subjective Spin on Roulette Wheels (2001) Downloads
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