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THEORIES OF CHOICE UNDER IGNORANCE AND UNCERTAINTY
Author(s) -
Kelsey David,
Quiggin John
Publication year - 1992
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.1992.tb00148.x
Subject(s) - economics , ignorance , knight , bayesian probability , econometrics , positive economics , decision theory , actuarial science , mathematical economics , microeconomics , mathematics , epistemology , statistics , philosophy , physics , astronomy
. In this paper, Knight's distinction between risk and uncertainty, and its significance for economic analysis are examined. The paper consists of a survey of some recent developments on the theory of choice under uncertainty and some applications of these theories to problems for which Bayesian Decision Theory has not proved entirely satisfactory. Two problems are examined in detail. The first is that of finance and insurance and the second is that of risktaking behaviour with special emphasis on lotteries.