Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/hal/pseptp/hal-03261452.html
   My bibliography  Save this paper

Savage’s response to Allais as Broomean reasoning

Author

Listed:
  • Franz Dietrich

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)

  • Antonios Staras

    (Cardiff University)

  • Robert Sugden

    (UEA - University of East Anglia [Norwich])

Abstract
Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that he had made an error. We examine the formal structure of Savage's ‘error-correcting' reasoning in the light of (i) behavioural economists' claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) Broome's critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage's reasoning is not vulnerable to Broome's critique, but does not provide support for the view that behavioural scientists can identify and counteract errors in people's choices or preferences.

Suggested Citation

  • Franz Dietrich & Antonios Staras & Robert Sugden, 2021. "Savage’s response to Allais as Broomean reasoning," PSE-Ecole d'économie de Paris (Postprint) hal-03261452, HAL.
    • Handle: RePEc:hal:pseptp:hal-03261452
    DOI: 10.1080/1350178X.2020.1857424
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sophie Jallais & Pierre-Charles Pradier, 2005. "The Allais Paradox and its Immediate Consequences for Expected Utility Theory," Post-Print halshs-00311396, HAL.
    2. Itzhak Gilboa, 2010. "Questions in Decision Theory," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 1-19, September.
    3. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2008. "How are preferences revealed?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1787-1794, August.
    4. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
    5. Gerardo Infante & Guilhem Lecouteux & Robert Sugden, 2016. "Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 23(1), pages 1-25, March.
    6. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, September.
    7. repec:hal:pseose:halshs-01249514 is not listed on IDEAS
    8. Paola Manzini & Marco Mariotti, 2014. "Welfare economics and bounded rationality: the case for model-based approaches," Journal of Economic Methodology, Taylor & Francis Journals, vol. 21(4), pages 343-360, December.
    9. Hume, David, 1739. "A Treatise of Human Nature (II) Of the Passions," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number hume1739a.
    10. Mongin, Philippe, 2019. "The Allais paradox: what it became, what it really was, what it now suggests to us," Economics and Philosophy, Cambridge University Press, vol. 35(3), pages 423-459, November.
    11. Dietrich, Franz & List, Christian, 2016. "Reason-Based Choice And Context-Dependence: An Explanatory Framework," Economics and Philosophy, Cambridge University Press, vol. 32(2), pages 175-229, July.
    12. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    13. Franz Dietrich & Antonios Staras & Robert Sugden, 2018. "A Broomean model of rationality and reasoning," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01904091, HAL.
    14. Han Bleichrodt & Jose Luis Pinto & Peter P. Wakker, 2001. "Making Descriptive Use of Prospect Theory to Improve the Prescriptive Use of Expected Utility," Management Science, INFORMS, vol. 47(11), pages 1498-1514, November.
    15. Matthew Rabin, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Econometrica, Econometric Society, vol. 68(5), pages 1281-1292, September.
    16. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
    17. Yuval Salant & Ariel Rubinstein, 2008. "(A, f): Choice with Frames -super-1," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1287-1296.
    18. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    19. Ivan Moscati, 2016. "Retrospectives: How Economists Came to Accept Expected Utility Theory: The Case of Samuelson and Savage," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 219-236, Spring.
    20. Hume, David, 1739. "A Treatise of Human Nature (I) Of the Understanding," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number hume1739.
    21. Koszegi, Botond & Rabin, Matthew, 2008. "Choices, situations, and happiness," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1821-1832, August.
    22. Cubitt, Robin P. & Sugden, Robert, 2001. "On Money Pumps," Games and Economic Behavior, Elsevier, vol. 37(1), pages 121-160, October.
    23. Hume, David, 1740. "A Treatise of Human Nature (III) Of Morals," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number hume1740.
    24. Bernheim, B. Douglas, 2016. "The Good, the Bad, and the Ugly: A Unified Approach to Behavioral Welfare Economics1," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 7(1), pages 12-68, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baccelli, Jean & Hartmann, Lorenz, 2023. "The Sure-Thing Principle," Journal of Mathematical Economics, Elsevier, vol. 109(C).
    2. Steven J. Humphrey & Nadia-Yasmine Kruse, 2024. "Who accepts Savage’s axiom now?," Theory and Decision, Springer, vol. 96(1), pages 1-17, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Franz Dietrich & Antonios Staras & Robert Sugden, 2021. "Savage’s response to Allais as Broomean reasoning," Journal of Economic Methodology, Taylor & Francis Journals, vol. 28(2), pages 143-164, April.
    2. Glenn W. Harrison, 2019. "The behavioral welfare economics of insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 44(2), pages 137-175, September.
    3. Sugden, Robert, 2021. "Hume's experimental psychology and the idea of erroneous preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 836-848.
    4. Heutel, Garth, 2019. "Prospect theory and energy efficiency," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 236-254.
    5. Gerardo Infante & Guilhem Lecouteux & Robert Sugden, 2016. "Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 23(1), pages 1-25, March.
    6. Daniel J. Benjamin & Mark Alan Fontana & Miles S. Kimball, 2020. "Reconsidering Risk Aversion," NBER Working Papers 28007, National Bureau of Economic Research, Inc.
    7. Glenn W. Harrison & Jia Min Ng, 2018. "Welfare effects of insurance contract non-performance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 43(1), pages 39-76, May.
    8. Robert Sugden, 2017. "Do people really want to be nudged towards healthy lifestyles?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(2), pages 113-123, June.
    9. Malte F. Dold, 2018. "Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(2), pages 160-178, April.
    10. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    11. Bogliacino, Francesco & Codagnone, Cristiano, 2021. "Microfoundations, behaviour, and evolution: Evidence from experiments," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 372-385.
    12. Francesco Cerigioni, 2021. "Dual Decision Processes: Retrieving Preferences When Some Choices Are Automatic," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1667-1704.
    13. Steiner, Jakub & Netzer, Nick & Robson, Arthur & Kocourek, Pavel, 2021. "Endogenous Risk Attitudes," CEPR Discussion Papers 16190, C.E.P.R. Discussion Papers.
    14. Hiroki Nishimura, 2014. "The Transitive Core: Inference of Welfare from Nontransitive Preference Relations," Working Papers 201419, University of California at Riverside, Department of Economics.
    15. Nishimura, Hiroki, 2018. "The transitive core: inference of welfare from nontransitive preference relations," Theoretical Economics, Econometric Society, vol. 13(2), May.
    16. Luca Congiu & Ivan Moscati, 2022. "A review of nudges: Definitions, justifications, effectiveness," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 188-213, February.
    17. FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011. "Behavioral fair social choice," LIDAM Discussion Papers CORE 2011043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Robert Sugden, 2017. "Characterising competitive equilibrium in terms of opportunity," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(3), pages 487-503, March.
    19. Ghosal, Sayantan & Dalton, Patricio, 2013. "Characterizing Behavioral Decisions with Choice Data," CAGE Online Working Paper Series 107, Competitive Advantage in the Global Economy (CAGE).
    20. Sheila Dow, 2010. "The Psychology of Financial Markets: Keynes, Minsky and Emotional Finance," Chapters, in: Dimitri B. Papadimitriou & L. Randall Wray (ed.), The Elgar Companion to Hyman Minsky, chapter 13, Edward Elgar Publishing.

    More about this item

    Keywords

    Savage; Allais Paradox; Broome; reasoning; behavioural economics;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:pseptp:hal-03261452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Caroline Bauer (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.