TY - JOUR
T1 - Probabilistic sophistication and stochastic monotonicity in the Savage framework
AU - Grant, Simon
AU - Özsoy, Hatice
AU - Polak, Ben
PY - 2008/5
Y1 - 2008/5
N2 - Machina and Schmeidler [Machina, M., Schmeidler, D., 1992. A more robust definition of subjective probability. Econometrica 60, 745-780] show that probabilistic sophistication can be obtained in a Savage setting without imposing expected utility by dropping Savage's axiom P2 (sure-thing principle) and strengthening his axiom P4 (weak comparative probability). Their stronger axiom, however, embodies a degree of separability analogous to P2. In this note, we obtain probabilistic sophistication using Savage's original axiom P4 and a weaker analog of Savage's P2.
AB - Machina and Schmeidler [Machina, M., Schmeidler, D., 1992. A more robust definition of subjective probability. Econometrica 60, 745-780] show that probabilistic sophistication can be obtained in a Savage setting without imposing expected utility by dropping Savage's axiom P2 (sure-thing principle) and strengthening his axiom P4 (weak comparative probability). Their stronger axiom, however, embodies a degree of separability analogous to P2. In this note, we obtain probabilistic sophistication using Savage's original axiom P4 and a weaker analog of Savage's P2.
KW - Cumulative dominance
KW - Probabilistic sophistication
KW - Stochastic monotonicity
KW - Subjective probability
KW - Sure-thing principle
UR - http://www.scopus.com/inward/record.url?scp=42749096336&partnerID=8YFLogxK
U2 - 10.1016/j.mathsocsci.2007.10.002
DO - 10.1016/j.mathsocsci.2007.10.002
M3 - Article
SN - 0165-4896
VL - 55
SP - 371
EP - 380
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
IS - 3
ER -