Resource title

Reconciliating support theory and the book-making principle

Resource image

image for OpenScout resource :: Reconciliating support theory and the book-making principle

Resource description

Support theory postulates that probability judgments for uncertain events depend on the description of events. We show that the theory violates basic consistency requirements for subjective probabilities and normative decision under uncertainty. We illustrate how support theory's incoherence stems from its assumption of non-extensionality rather than subadditivity. We propose a relaxation of the book-making principle, a famous consistency argument, and bridge the descriptively appealing support theory with normative criteria. In this manner we derive a unique way for using probability judgments from support theory as a consistent input for decision theory.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2008/2008-12.pdf

Resource license

Copyright INSEAD. All rights reserved