HEC Research Papers Series,
HEC Paris

Abstract: The standard, Bayesian account of rational belief and decision is often argued to be unable to cope properly with severe uncertainty, of the sort ubiquitous in some areas of policy making. This paper tackles the question of what should replace it as a guide for rational decision making. It defends a recent proposal, which reserves a role for the decision maker’s confidence in beliefs. Beyond being able to cope with severe uncertainty, the account has strong normative credentials on the main fronts typically evoked as relevant for rational belief and decision. It fares particularly well, we argue, in comparison to other prominent non-Bayesian models in the literature.

Keywords: Confidence; Decision Under Uncertainty; Belief; Rationality

JEL-codes: D81; H00

40 pages, First version: October 3, 2017. Revised: April 20, 2018.

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