Publisher Description

Recent decades have witnessed developments in decision theory that propose an alternative to the accepted Bayesian view. According to this view, all uncertainty can be quantified by probability measures. This view has been criticized on empirical as well as conceptual grounds. David Schmeidler has offered an alternative way of thinking about decision under uncertainty, which has become popular in recent years. This book provides a review and an introduction to this new decision theory under uncertainty. The first part focuses on theory: axiomatizations, the definition of uncertainty aversion, the issue of updating and independence, and so forth. The second part deals with applications to economic theory, game theory, and finance. With a wide variety of contributions of the highest order, the book can be considered to be extremely authoritative. This is the first collection to include papers on this topic, and it can thus serve as an introduction to researchers who are new to the field or a graduate course textbook.With this goal in mind, the book contains survey introductions that are aimed at a graduate level student, and help explain the main ideas, as well as put them in perspective.

Back Cover

This volume brings together important papers, coupled with new introductions, in the massively influential area of uncertainty in economic theory. Seminal papers are available together for the first time in book format, with new introductions and under the steely editorship of Itzhak Gilboa - this book is a useful reference tool for economists all over the globe.

Author Biography

Itzhak Gilboa

Table of Contents

Part One: Theory 1. Introduction, Itzhak Gilboa2. Preference Axiomatizations for Decision under Uncertainty, Peter P. Wakker3. Defining Ambiguity and Ambiguity Attitude, Paolo Ghirardato4. Introduction to the Mathematics of Ambiguity, Massimo Marinacci and Luigi Montrucchio5. Subjective probability and expected utility without additivity David Schmeidler (Econometrica, 57 (1989): 571-587)6. Maxmin expected utility with a non-unique prior, Itzhak Gilboa and David Schmeidler (Journal of Mathematical Economics, 18 (1989: 141-153)7. A simple axiomatization of nonaddictive expected utility, Rakesh Sarin and Peter P. Wakker (Econometrica, 60 (1992): 1255-1272)8. Updating ambiguous beliefs, Itzhak Gilboa and David Schmeidler (Journal of Economic Theory, 59 (1993): 33-49)9. A Definition of Uncertainty Aversion, Larry G. Epstein (Review of Economic Studies, 66 (1999): 579-608)10. Ambiguity made precise: a comparative foundation, Paolo Ghirardato and Massimo Marinacci (Journal of Economic Theory, 102 (2002): 251-289)11. Stochastically independent randomization and uncertainty aversion, Peter Klibanoff (Economic Theory, 18 (2001): 605-620)12. Decomposition and representation of coalitional games, Massimo Marinacci (Mathematics of Operations Research, 21 (1996): 1000-1015)Part Two: Applications 13. An overview, Sujoy Mukeriji and Jean-Marc Tallon14. Ambiguity aversion and the incompleteness of constractual form, Sujoy Mukerji (American Economic Review, 88 (1998): 1207-1232)15. Ambiguity aversion and imcompleteness of financial markets, Sujoy Mukerji and Jean-Marc Tallon (The Review of Economic Studies, forthcoming)16. A quartet of semigroups for model specfication, robustness, prices of risk, and model detection, Evan W. Anderson, Lars Peter Hansen, and Thomas J. Sargent (Journal of the European Economic Association, forthcoming)17. Uncertainty aversion, risk aversion, and the optimal choice of portfolio, James Dow and Sergio Ribeiro da Costa Werlang (Econometrica, 60 (1992): 197-204)18. Intertemporal asset pricing under Knightian uncertainty, Larry G. Epstein and Tan Wang (Econometrica, 62 (1994): 283-322)19. Sharing Beliefs: between agreeing and disagreeing, Antoine Billot, Alain Chateauneuf, Itzhak Gilboa, and Jean-Marc Tallon (Econometrica, 68 (2000): 685-69420. Equilibrium in beliefs under uncertainty, Kin Chung Lo (Journal of Economic Theory, 71 (1996): 443-484)21. The right to remain silent, Joseph Greenberg (Theory and Decision, 48 (2000): 193-204)22. On the measurement of inequality under uncertainty, Elchanan Ben-Porath, Itzhak Gilboa, and David Schmeidler (Journal of Economic Theory, 75 (1997): 194-204)

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