Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189219 
Year of Publication: 
1994
Series/Report no.: 
Queen's Economics Department Working Paper No. 897
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
In this paper we suggest a new interpretation of non-additive probabilities. We study a decision-maker who follows the Savage axioms. We show the if (s)he is able to take unobservable actions which influence the probabilities of outcomes then it can appear to an outsider as if the his/her subjective probabilities are non-additive. We make a related analysis of models with objective probabilities and show that the induced preferences can have the rank dependent expected utility form. Implications for multi-period decisions are explored. We show that such preferences are not vulnerable to "Dutch books".
Subjects: 
uncertainty aversion
induced preferences
Dutch Book
rank dependent expected utility
JEL: 
D81
Document Type: 
Working Paper

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