Journal Article

Countably Additive Subjective Probabilities

Maxwell B. Stinchcombe

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 64, issue 1, pages 125-146
Published in print January 1997 | ISSN: 0034-6527
Published online January 1997 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.2307/2971743
Countably Additive Subjective Probabilities

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The subjective probabilities implied by Savage's (1954, 1972) Postulates are finitely but not countably additive. The failure of countable additivity leads to two known classes of dominance paradoxes, money pumps and indifference between an act and one that pointwise dominates it. There is a common resolution to these classes of paradoxes and to any others that might arise from failures of countably additivity. It consists of reinterpreting finitely additive probabilities as the “traces” of countably additive probabilities on larger state spaces. The new and larger state spaces preserve the essential decision-theoretic structures of the original spaces.

Journal Article.  0 words. 

Subjects: Economics

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