Is it always rational to satisfy Savage's axioms?

Itzhak Gilboa*, Andrew Postlewaite, David Schmeidler

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

77 Scopus citations

Abstract

This note argues that, under some circumstances, it is more rational not to behave in accordance with a Bayesian prior than to do so. The starting point is that in the absence of information, choosing a prior is arbitrary. If the prior is to have meaningful implications, it is more rational to admit that one does not have sufficient information to generate a prior than to pretend that one does. This suggests a view of rationality that requires a compromise between internal coherence and justification, similarly to compromises that appear in moral dilemmas. Finally, it is argued that Savage's axioms are more compelling when applied to a naturally given state space than to an analytically constructed one; in the latter case, it may be more rational to violate the axioms than to be Bayesian.

Original languageEnglish
Pages (from-to)285-296
Number of pages12
JournalEconomics and Philosophy
Volume25
Issue number3
DOIs
StatePublished - Nov 2009

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