1. Preface; 2. Motivating examples; 3. Free will and determinism; 4. The principle of indifference; 5. Relative frequencies; 6. Subjective probabilities; 7. A case study; 8. The role of theories; 9. Von Neumann and Morgenstern's theorem; 10. De Finetti's theorem; 11. Savage's theorem; 12. The definition of states; 13. A critique of Savage; 14. Objectivity and rationality; 15. Anscombe-Aumann's theorem; 16. Choquet expected utility; 17. Prospect theory; 18. Maxmin expected utility; 19. Case-based qualitative beliefs; 20. Frequentism revisited; 21. Future research.
This book describes the classical axiomatic theories of decision under uncertainty, as well as critiques thereof and alternative theories.
Itzhak Gilboa is Professor in the Berglas School of Economics, Tel Aviv University, and Professor in the newly established Department of Economics and Decision Science, HEC, Paris. Earlier, he became a chaired professor at Northwestern University in 1992, visited at the Department of Economics, University of Pennsylvania (1995-97), and was a Professor at Boston University (1997-99). Professor Gilboa also served as a Fellow at the Cowles Foundation at Yale University from 2001 to 2007. The recipient of a Sloan Fellowship, among other awards, he has published articles in the leading economic theory journals, primarily on decision under uncertainty. Professor Gilboa coauthored A Theory of Case-Based Decisions with David Schmeidler (Cambridge University Press, 2001). He received his Ph.D. from Tel Aviv University in 1987.
'This is a fantastic book. It presents an intelligent, rigorous,
and thought-provoking treatment of the theory of choice under
uncertainty. The combination of philosophical and mathematical
approaches is a treat. Graduate students and professional
economists alike have much to learn from this book.' Daron
Acemoglu, Massachusetts Institute of Technology
'This is a beautifully written book that I recommend to anyone who
is interested in understanding the 'what,' 'how,' and 'why' of
decision theory. The balance between conceptual issues, formalism,
and philosophical underpinnings is unique. It will become a
standard reference and text.' Larry Epstein, Boston University
'With his seminal works, Itzhak Gilboa is one of the leading
figures in the 'neoclassical' decision theory that in the past 20
years has considerably expanded the scope of the classical theory
pioneered by de Finetti, Ramsey, Savage, and von Neumann. This book
provides a superb and much-needed introduction to this exciting
research area.' Massimo Marinacci, Collegio Carlo Alberto,
Italy
'At the heart of most economic analysis is a description of how
individuals make decisions. There have been fundamental advances in
our understanding of decision making in recent years, and this book
provides an extremely accessible explanation of the current state
of the field. Perhaps more importantly, it lays out the conceptual
underpinnings of decision theory: why the various assumptions in
modeling decision making are made and how they affect economic
predictions.' Andrew Postlewaite, University of Pennsylvania
'Expected utility theory underlies most of statistics, economics,
and finance. But are utility functions and probabilities all that
we need to formulate wise decisions? And where do utility functions
and probabilities come from? Written by the distinguished creator
of new decision theories Itzhak Gilboa, Decision Theory under
Uncertainty is a beautifully written critical account of decision
theory that answers these and other important questions. Gilboa's
work opens doors for both theorists and applied workers.' Thomas
Sargent, New York University
'[Gilboa] provides a textbook, but mathematically sophisticated,
treatment of the recent developments in Choquet expected utility
theory, prospect theory, and maxmin expected utility theory.'
History of Economic Thought and Policy
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