Shackle and Modern Decision Theory

2008

This paper deals with the intellectual environment in which George L. S. Shackle's theory of decision making was formulated and first discussed. Shackle's approach had a great impact on decision theory in late 1940s and early 1950s being the single formalised attempt to discard the probability framework in the description of behaviour under uncertainty-a goal shared by Knight and Keynes. Against Shackle, Arrow defended the use of probability theory in decision making, by denying that the Knightian distinction between risk and uncertainty had any behavioural significance, and paving the way to Savage's Foundations of Statistics as the new mainstream reference. Through an assessment of the reception of Shackle's theory the paper presents the way a number of theoretical economists, psychologists, and mathematicians were interested in the viability of a formally structured alternative to theories of behaviour using probability statements to describe uncertainty. The paper aims to show that the lively but concentrated discussion on alternative decisional criteria Shackle was part of is crucial to understand the multifarious developments observed in modern decision theory in the last twenty years or so. Indeed, as discussed in a twin paper by Basili and Zappia, Shackle's theory was a much more viable alternative to subjective expected utility than both its contemporary critics and modern decision theorists have recognised.

SSRN Electronic Journal, 2000

This paper discusses the evolution of decision theory after Savage's Foundations. Two developments are examined. First, it is presented the rationale of Shackle's proposal to abandon probabilistic decision making. Second, it is discussed the axiomatisation provided by the nonadditive probability approach to account for the experimental evidence originated by the Ellsberg

G.L.S Shackle’s rejection of the probability tradition stemming from Knight's definition of uncertainty was a crucial episode in the development of modern decision theory. A set of methodological statements characterizing Shackle’s stance, abandoned for long, especially after Savage’s Foundations, have been re-discovered and are at the basis of current non-expected utility theories, in particular of the non-additive probability approach to decision making. This paper examines the discussion between Shackle and his critics in the 1950s. Drawing on Shackle’s papers housed at Cambridge University Library as well as on printed matter, we show that some critics correctly understood two aspects of Shackle’s theory which are of the utmost importance in our view: the non-additive character of the theory and the possibility of interpreting Shackle’s ascendancy functions as a specific distortion of the weighting function of the decision maker. It is argued that Shackle neither completely ...

2005

G.L.S Shackle's rejection of the probability tradition stemming from Knight's definition of uncertainty was a crucial episode in the development of modern decision theory. A set of methodological statements characterizing Shackle's stance, abandoned for long, especially after Savage's Foundations, have been rediscovered and are at the basis of current non-expected utility theories, in particular of the non-additive probability approach to decision making. This paper examines the discussion between Shackle and his critics in the 1950s. Drawing on Shackle's papers housed at Cambridge University Library as well as on printed matter, we show that some critics correctly understood two aspects of Shackle's theory which are of the utmost importance in our view: the non-additive character of the theory and the possibility of interpreting Shackle's ascendancy functions as a specific distortion of the weighting function of the decision maker. It is argued that Shackle neither completely understood criticisms nor appropriately developed suggestions put forward by scholars like Kenneth Arrow, Ward Edwards, Nicholas Georgescu-Roegen. Had he succeeded in doing so, we contend, his theory might have been a more satisfactory alternative to Savage's theory than it actually was.

SSRN Electronic Journal, 2000

This paper assesses the rationale of George Shackle's argument against Bayesian decision making in the light of recent developments of modern decision theory. The focus is on the so-called non-additive probability approach to decision theory under uncertainty, which, not unlike Shackle's analysis, stresses the inability of agents to describe uncertain environments. A discussion of the pros and cons of the parallel between Shackle's theory and the non-additive developments is provided.

Decision-making Process, 2009

Conditions of uncertainty have increasingly been perverted to describe quantifiable risk.

2006

In this paper, Knight's distinction between risk and uncertainty, and its significance for economic analysis are examined. The paper consists of a survey of some recent developments on the theory of choice under uncertainty and some applications of these theories to problems for which Bayesian Decision Theory has not proved entirely satisfactory. Two problems are examined in detail. The first is that of finance and insurance and the second is that of risktaking behaviour with special emphasis on lotteries.

Œconomia, 2019

The European Journal of the History of Economic Thought, 2018