Uncertainty and Risk - DARP
Uncertainty and Risk - DARP
Uncertainty and Risk - DARP
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Microeconomics CHAPTER 8. UNCERTAINTY AND RISK<br />
while experiment 2 suggests that<br />
L v black (0; 1000) + [1 L ] v white (0; 1000)<br />
> R v black (0; 1000) + [1 R ] v white (0; 1000) (8.6)<br />
We can see that (8.5) implies<br />
L [v black (1000; 0) v white (1000; 0)] > R [v black (1000; 0) v white (1000; 0)]<br />
from which we deduce that, given (8.3), L > R .<br />
However (8.5) implies<br />
L [v black (0; 1000) v white (0; 1000)] > R [v black (0; 1000) v white (0; 1000)] :<br />
So that, given (8.4), we would have L < R –a contradiction.<br />
revealed likelihood axiom must be violated.<br />
Therefore the<br />
cFrank Cowell 2006 122
Change language