A Rehabilitation of the Principle of Insufficient Reason

Sinn, Hans-Werner (1980): A Rehabilitation of the Principle of Insufficient Reason. In: The Quarterly Journal of Economics, Vol. 94, No. 3: p. 493

Abstract

It is shown that two of the axioms necessary for the expected utility rule imply the Principle of Insufficient Reason. Whenever a decision maker knows the possible states of the world, but completely lacks information about the plausibility of each single state, he has to behave as if all states occurred with the same objective probability, known with certainty. The result is applied to decision trees and used to solve a problem formulated by Savage in order to discredit the classical version of the Principle of Insufficient Reason.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair for Public Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English