Tag Archives: decision theory

Cognitive-affective bias. Short post but really a long one considering the links, which are useful in gaining understanding as well as justifying claims.Stumbling and MumblingWhy we are wrongChris Dillow | Investors Chronicle

According to Keynes we live in a world permeated by unmeasurable uncertainty – not quantifiable stochastic risk – which often forces us to make decisions based on anything but rational expectations. Sometimes we ‘simply do not know.’ Keynes would not have accepted the view of Bayesian economists, according to whom expectations “tend to be distributed, for the same information set, about the prediction of the theory.” Keynes, rather, thinks that we base our expectations on the confidence or...