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Subjective Probability Does Not Exist

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  • Asad Zaman

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

We show that the rationality arguments used to establish the existence of subjective probabilities depend essentially on the identification of acting-as-ifyou-believe and actually believing. We show that these two ideas, the pretense of knowledge about probabilities, and actual knowledge about probabilities, can easily be distinguished outside the restricted context of choice over special types of lotteries. When making choices over Savage-type lotteries, rational agents will act as if they know their subjective probabilities for uncertain events, but they will reveal their ignorance in other decision making contexts. This means that subjective probabilities cannot be assumed to exist, except when there is objective warrant for them.

Suggested Citation

  • Asad Zaman, 2017. "Subjective Probability Does Not Exist," PIDE-Working Papers 2017:152, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2017:152
    as

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    File URL: https://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-152.pdf
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    References listed on IDEAS

    as
    1. Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 73-106.
    2. Ramsey, Frank P., 1926. "Truth and Probability," Histoy of Economic Thought Chapters, in: Braithwaite, R. B. (ed.),The Foundations of Mathematics and other Logical Essays, chapter 7, pages 156-198, McMaster University Archive for the History of Economic Thought.
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    More about this item

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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