Known, Unknown, and Unknowable Uncertainties

By Clare Chua Chow, R. Sarin. 2002

179 citations recorded by the source corpus.

In normative decision theory, the weight of an uncertain event in a decision is governed solely by the probability of the event. A large body of empirical research suggests that a single notion of probability does not accurately capture peoples' reactions to uncertainty. As early as the 1920s, Knight made the distinction between cases where probabilities are known and where probabilities are unknown. We distinguish another case –- the unknowable uncertainty –- where the missing information is unavailable to all. We propose that missing information influences the attractiveness of a bet contingent upon an uncertain event, especially when the information is available to someone else. We demonstrate that the unknowable uncertainty –- falls in preference somewhere in between the known and the known uncertainty.

Subfields: General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/d0785a785a0938bb319b9affb4baecb6dfd451a1

Citations in the corpus

• Decision theory under ambiguity (2012, unknown): “See also Chow and Sarin (2002). Yates and Zukowski (1976), Curley and Yates (1985) on the other hand report significant ambiguity aversion, through the elicitation of willingness to bet in various (informational) circumstances.”