Uncertainty Appraisals: A Radical Reformulation of Subjective Probability

Jeffrey, H.J.. / Published 2013 / Presentation

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Note: At the time of this presentation, it was retitled "The Expert's Dilemma."
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Presenter H. Joel Jeffrey, Ph.D.
Date October 18, 2013
Abstract: When a patient asks a doctor, “What are my chances?” they are not asking what percentage of people recover; they want to know their chances. When a judge asks a psychologist, “What are the chances this person will re-offend?” she wants to know what to count on from this person, not what percentage of a group will re-offend — because she has to make a decision about this individual, not a group. When a psychologist asks himself, “What are the chances this person will harm himself or others?” he is not asking, “How many people like this will harm themselves or others?” because he needs to make a decision about that individual, not a group. The doctor, the judge, and the psychologist are asking questions involving what is usually called “subjective probability”. Contrary to how it has been thought of since the 17th century, “subjective probability” is not probability at all. We present a radical reformulation of that range of phenomena as uncertainty appraisals, re-descriptions which, as with all other appraisals, carry tautological implications for action. The new formulation yields better ways of replying to “subjective probability” questions and a new method, Complete Situation Analysis, for combining actual and “subjective” probabilities.
1. Jeffrey, H.J. (2010). Homo Communitatis: A rigorous foundation for behavioral finance. https://www.researchgate.net/publication/228788898_Homo_Communitatis_A_Rigorous_Foundation_for_Behavioral_Finance. 2. Jeffrey, H.J. & Putman, A.O. (2013). The Irrationality illusion: A new paradigm for economics and behavioral economics. The Journal of Behavioral Finance, 14:3, 161-194. 3. Jeffrey, H.J. & Putman, A.O. (2015). “Subjective Probability in Behavioral Economics and Finance: A Radical Reformulation,” The Journal of Behavioral Finance, 16(3), 231-249.