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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
Leonard Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that the 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) John 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.

Suggested Citation

  • Franz Dietrich & Antonios Staras & Robert Sugden, 2020. "Savage's response to Allais as Broomean reasoning," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02905466, HAL.
    • Handle: RePEc:hal:cesptp:halshs-02905466
    DOI: 10.1080/1350178X.2020.1857424
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02905466
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    References listed on IDEAS

    as
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    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.
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    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.

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    More about this item

    Keywords

    Allais Paradox; Broome; rationality; Savage; behavioural economics; reasoning;
    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

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