The sure thing principle and the value of information

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper examines the relationship between Savage's sure thing principle and the value of information. We present two classes of results. First, we show that, under a consequentialist axiom, the sure-thing principle is neither sufficient nor necessary for perfect information to be always desirable: specifically, under consequentialism, the sure thing principle is not implied by the condition that perfect information is always valuable; moreover, the joint imposition of the sure thing principle, consequentialism and either one of two state independence axioms does not imply that perfect information is always desirable. Second, we demonstrate that, under consequentialism, the sure thing principle is necessary for a nonnegative value of possibly imperfect information (though of course the principle is still not sufficient). One implication of these results is that the sure thing principle, under consequentialism, plays a somewhat different role in ensuring dynamic consistency in decision making under uncertainty than does the independence axiom in decision making under risk.

Original languageEnglish (US)
Pages (from-to)21-36
Number of pages16
JournalTheory and Decision
Volume42
Issue number1
StatePublished - 1997

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Ethical Theory
Decision making
Decision Making
decision making
Uncertainty
Joints
Value of information
Sure-thing principle
uncertainty
Consequentialism

Keywords

  • Consequentialism
  • Dynamic consistency
  • Sure thing principle
  • Value of information

ASJC Scopus subject areas

  • Economics and Econometrics
  • Social Sciences (miscellaneous)

Cite this

The sure thing principle and the value of information. / Schlee, Edward.

In: Theory and Decision, Vol. 42, No. 1, 1997, p. 21-36.

Research output: Contribution to journalArticle

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