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#21
10-03-2005, 01:40 AM
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Re: logic problem (fixed wording cuz i suck)
The cancellation principle is an axiom of Subjective Expected Utility theory, which states that if A>=B, then A+C>=B+C. I believe that OP and possibly his girlfriend is a bit confused about the application of this principle in this problem. It is actually an example of when the cancellation principle doesn't hold to be true. According to Ellsburg's paper, where this ball problem originally appeared, people were much more inclined to choose option a given the first pair (bet on red as opposed to black, or R>B), and option b given the second pair (bet on black and yellow as opposed to red and yellow, or B+Y>R+Y). According to the Cancellation principle, if B+Y>R+Y, then B>R, but this was shown to be not true.
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#22
10-03-2005, 01:43 AM
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Re: logic problem (fixed wording cuz i suck)
[ QUOTE ]
it is a variance question. In each question the EV is neutral, but in question 1 you can pick a known 1/3 chance or an unknown chance that averages to 1/3. In question 2, a known 2/3 chance of getting paid or an unknown chance that averages to 2/3. [/ QUOTE ] it's not a variance question. didnt you read the thread?
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#23
10-03-2005, 01:48 AM
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Re: logic problem (fixed wording cuz i suck)
[ QUOTE ]
The cancellation principle is an axiom of Subjective Expected Utility theory, which states that if A>=B, then A+C>=B+C. I believe that OP and possibly his girlfriend is a bit confused about the application of this principle in this problem. It is actually an example of when the cancellation principle doesn't hold to be true. According to Ellsburg's paper, where this ball problem originally appeared, people were much more inclined to choose option a given the first pair (bet on red as opposed to black, or R>B), and option b given the second pair (bet on black and yellow as opposed to red and yellow, or B+Y>R+Y). According to the Cancellation principle, if B+Y>R+Y, then B>R, but this was shown to be not true. [/ QUOTE ] Wow, that's cool to see it put that way. What field are you in, you seem to really know your ish?
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#24
10-03-2005, 01:55 AM
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Re: logic problem (fixed wording cuz i suck)
[ QUOTE ]
Wow, that's cool to see it put that way. What field are you in, you seem to really know your ish? [/ QUOTE ] I'm an Army helicopter pilot. [img]/images/graemlins/smile.gif[/img]
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