Ellsberg’s Decision Rules and Keynes’s Long-Term Expectations
Marcello Basili () and
Carlo Zappia ()
Department of Economics University of Siena from Department of Economics, University of Siena
This paper presents an intuitive way to represent Keynes’s notion of long-term expectations and its implications for decision-making, using the so-called e-contamination approach. Further to a suggestion by Ellsberg, a coherent Keynesian expectational function for decisions under uncertainty is derived. The paper draws on the similarities between the analyses of Keynes and Ellsberg and contends that much of current decision theory under ambiguity follows in Keynes’s footsteps
Keywords: uncertainty; expectations; Keynes; consensus distribution; epsilon-contamination (search for similar items in EconPapers)
JEL-codes: B26 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe, nep-pke and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:777
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