Decision Making Under Ignorance
Ignorance is an extreme form of uncertainty. In most narrow and technical sense, it means inability to assign a meaningful probability to the phenomena of interest. In more general sense, the state of ignorance is the result of the absence of knowledge about structural factors that influence the issues, the lack of reliable information or inability to completely determine the space of alternatives and consequences. We argue that the practice of casually papering over the ignorance with subjective judgments and analytic assumptions can have serious consequences. This chapter provides a structured survey (and necessarily selective) of significant ideas and proposals for decision making under ignorance, from the ground breaking work by Hurwicz and Arrow to the latest result of τ-anchor utility theory. A careful analysis and isolation of ignorance in the system of knowledge about a subject or a problem is of particular importance in the context of risk assessment and risk management.
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