Probability and Uncertainty in Economic Modeling

In: Voprosy ėkonomiki: ežemesjačnyj žurnal, Heft 10, S. 46-61

Abstract

The article considers the paradigm of subjective probability and expected utility theory with respect to their applications in the theory of decision-making. Advantages and shortcomings of Savage's axiomatic in the subjective probability theory are analyzed, the models of beliefs formation are considered. The authors propose a new approach to the analysis of decision-making — a multiple priors model, where an agent attributes to each event not a single probability, but a range of probabilities.