We distinguish three qualitatively different types of uncertainty—ethical, option and state space uncertainty—that are distinct from state uncertainty, the empirical uncertainty that is typically measured by a probability function on states of the world. Ethical uncertainty arises if the agent cannot assign precise utilities to consequences. Option uncertainty arises when the agent does not know what precise consequence an act has at every state. Finally, state space uncertainty exists when the agent is unsure how to construct an exhaustive state space. These types of uncertainty are characterised along three dimensions—nature, object and severity—and the relationship between them is examined. We conclude that these different forms of uncertainty cannot be reduced to empirical uncertainty about the state of the world without inducing an increase in its severity.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
This is the net price. Taxes to be calculated in checkout.
The program is available online at http://www.bbc.co.uk/programmes/b01hxmx1.
This is not of course to say that it is the only view being expressed. Inevitably such a broad characterisation of the state of thinking in a field will be a bit of a caricature and it is quite possible that nobody holds the default view in its completely unqualified form.
See Popper (1959) for an early statement of this argument.
Though, as Binmore (2009) emphasises, Savage only held that this applied in small-world decision making.
This epistemic reading of ambiguity aversion is not the only one to be found in the literature. See, for instance, Fox and Tversky (1995).
An argument of this kind has been made for the case of Knightian uncertainty by Bewley (1986).
The term ‘ethical’ is used here in the same way that it is used by Ramsey, to denote that which has to do with what matters to the agent. It is not meant to be read as having only to do with morality.
This is broadly the same conclusion as is reached by Broome (1991).
Al-Najjar, N. I., & Weinstein, J. (2009). The ambiguity aversion literature: A critical assessment. Economics and Philosophy, 25, 249–284.
Anscombe, F. J., & Aumann, R. J. (1963). A definition of subjective probability. The Annals of Mathematical Statistics, 34(1), 199–205.
Bewley, T. F. (1986/2002). Knightian decision theory. Part I. Decisions in Economics and Finance, 25, 79–110.
Binmore, K. (2009). Rational decisions. Princeton, NJ: Princeton University Press.
Bradley, R. (2009). Revising incomplete attitudes. Synthese, 171(2), 235–256.
Broome, J. (1991). Desire, belief and expectation. Mind, 100(2), 265–267.
Dekel, E., Lipman, B. L., & Rustichini, A. (2001). Representing preferences with a unique subjective state space. Econometrica, 69(4), 891–934.
Ellsberg, D. (1961). Risk, ambiguity, and the Savage axioms. Quarterly Journal of Economics, 75(4), 643–669.
Epstein, L. G., & Seo, K. (2009). Subjective states: A more robust model. Games and Economic Behavior, 67(2), 408–427.
Fox, C. R., & Tversky, A. (1995). Ambiguity aversion and comparative ignorance. The Quarterly Journal of Economics, 110(3), 585–603.
Ghirardato, P. (2001). Coping with ignorance: Unforeseen contingencies and non-additive uncertainty. Economic Theory, 17, 247–276.
Gilboa, I., & Schmeidler, D. (1989). Maxmin expected utility with non-unique prior. Journal of Mathematical Economics, 18, 141–153.
Gilboa, I., & Schmeidler, D. (1995). Case-based decision theory. The Quarterly Journal of Economics, 110(3), 605–639.
Gilboa, I., & Marinacci, M. (2011). Ambiguity and the Bayesian paradigm. Mimeo.
Hansson, S.-O. (1994). Decision making under great uncertainty. Philosophy of the Social Sciences, 26(3), 369–386.
Hansson, S.-O. (2013). Decision theory. A brief introduction. http://home.abe.kth.se/soh/decisiontheory.pdf.
Jeffrey, R. C. (1965). The logic of decision. New York: McGraw Hill.
Joyce, J. (1999). Foundations of causal decision theory. Cambridge: Cambridge University Press.
Joyce, J. (2010). A defense of imprecise credences in inference and decision making. Philosophical Perspectives, 24(1), 281–323.
Karni, E. (2013). Subjective expected utility with incomplete preferences. Econometrica, 81(1), 255–284.
Keynes, J. M. (1937). The general theory of employment. The Quarterly Journal of Economics, 51(2), 2009–2023.
Knight, F. H. (1921). Risk, uncertainty and profit. Boston, MA: Hart, Schaffner and Marx.
Kreps, D. M. (1992). Static choice in the presence of unforeseen contingencies. In P. Dasgupta, D. Gale, O. Hart, E. S. Maskin (Eds.), Economic analysis of markets and games (pp. 258–281). Cambridge, MA: MIT Press.
Levi, I. (1974). On indeterminate probabilities. The Journal of Philosophy, 71(13), 391–418.
Levi, I. (1985). Imprecision and indeterminacy in probability judgment. Philosophy of Science, 25(3), 390–409.
Levi, I. (1986). Hard choices: Decision making under unresolved conflict. Cambridge: Cambridge University Press.
Lewis, D. (1981). Causal decision theory. Australasian Journal of Philosophy, 59, 5–30.
Lewis, D. (1988). Desire as belief. Mind, 97, 323–332.
Luce, R. D., & Raiffa, H. (1957/1989). Games and decisions. Introduction and critical survey. New York: Dover Publications.
Mas-Colell, A., Whinston, M. D., & Green, J. R. (1995). Micoreconomic theory. New York: Oxford Press.
Oddie, G. (1994). Harmony, purity, truth. Mind, 103(412), 451–472.
Popper, K. (1959). The logic of scientific discovery. London: Hutchinson.
Savage, L. J. (1954). The foundations of statistics. New York: Wiley.
Schervish, M. J., Seidenfeld, T., & Kadane, J. B. (1995). A representation of partially ordered preferences. The Annals of Statistics, 23(6), 2168–2217.
Schmeidler, D. (1989). Subjective probability and expected utility without additivity. Econometrica, 57(3), 571–587.
Slovic, P., & Tversky, A. (1974). Who accepts Savage’s axioms?. Behavioral Science, 14, 368–373.
Stalnaker, R. (1981). Letter to David Lewis. In W. Harper, Stalnaker & G. Pearce & (Eds.), IFS: Conditionals, belief, decision, chance, and time. Dordrecht, NL: Reidel.
Walker, O., & Dietz, S. (2011). A representation result for choice under conscious unawareness. Working Paper, Grantham Research Institute, London, UK.
Walley, P. (1991). Statistical reasoning with imprecise probabilities. London: Chapman and Hall.
Weintraub, R. (2007). Desire as belief, Lewis notwithstanding. Logic and Analysis, 67(294), 116–122.
We would like to acknowledge the support of the Arts and Humanities Research Council (Grant Reference: AH/I003118/1), The Netherlands Organisation for Scientific Research (Grant Number 236-20-005), and the Fonds National de la Recherche Luxembourg (Grant Number 09-194). We are grateful to Hykel Hosni and Casey Helgeson for their comments on an earlier draft.
About this article
Cite this article
Bradley, R., Drechsler, M. Types of Uncertainty. Erkenn 79, 1225–1248 (2014). https://doi.org/10.1007/s10670-013-9518-4
- Factual Uncertainty
- Normative Uncertainty
- Causal Decision Theorist
- Evidential Decision Theory
- Default View