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Evidence Theory: A Mathematical Framework for Unpredictable Hypotheses

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  • Guido Fioretti

    (Universita' di Siena)

Abstract

Shafer's evidence theory is a branch of the mathematics of uncertain reasoning that allows for novel possibilities to be conceived by a decision-maker. Many of its findings exhibit striking similarities with an alternative decision theory purported by Shackle in the 1950s, before expected utility maximization monopolized the scene. Evidence theory does not attempt to formalize the emergence of novelties, but it is a suitable framework for reconstructing the formation of beliefs when novelties appear. An application to decision-making in the biotech and pharmaceutical industry illustrates the potentialities of evidence theory, as well as its shortcomings.

Suggested Citation

  • Guido Fioretti, 2002. "Evidence Theory: A Mathematical Framework for Unpredictable Hypotheses," Experimental 0207001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpex:0207001
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    References listed on IDEAS

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    7. Ford, J.L. & Ghose, S., 1994. "Belief, Credibility, Disbelief, Possibility, Potential Surprise and Probability as Measures of Uncertainty: Some Experimental Evidence," Discussion Papers 94-22, Department of Economics, University of Birmingham.
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    Cited by:

    1. Fioretti, Guido, 2009. "Either, Or. Exploration of an Emerging Decision Theory," MPRA Paper 12897, University Library of Munich, Germany.
    2. Guido Fioretti, 2009. "Evidence Theory As A Procedure For Handling Novel Events," Metroeconomica, Wiley Blackwell, vol. 60(2), pages 283-301, May.
    3. Marcello Basili & Carlo Zappia, 2009. "Shackle And Modern Decision Theory," Metroeconomica, Wiley Blackwell, vol. 60(2), pages 245-282, May.
    4. Alexander Harin, 2006. "A Rational Irrational Man?," Microeconomics harin_alexander.34115-060, Socionet.

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    More about this item

    Keywords

    Shackle; Shafer; Cognition; Innovation; Biotechnology;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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