Decision-theoretic approaches to non-knowledge in economics

Abstract

We review two strands of conceptual approaches to the formal representation of a decision maker's non-knowledge at the initial stage of a static one-person, one-shot decision problem in economic theory. One focuses on representations of non-knowledge in terms of probability measures over sets of mutually exclusive and exhaustive consequence-relevant states of Nature, the other deals with unawareness of potentially important events by means of sets of states that are less complete than the full set of consequence-relevant states of Nature. We supplement our review with a brief discussion of unresolved matters in both approaches.

arXiv comment13 pages, LaTeX2e, hyperlinked references. To appear in "Routledge International Handbook of Ignorance Studies," edited by Matthias Groß and Linsey McGoey (London: Routledge), due to be published in February 2015