General Introduction: Meanings and Philosophy
In lecture 8A, we gave a new definition of probability. Each random event has many possible outcomes. One of these possibilities is realized, at which point all other possibilities become “what might have happened”, while the realized outcome acquires 100% probability. Probability is about FUTURE POSSIBILITIES. Everything which can happen creates possible future worlds.
In the early 20th century, there was a huge debate between two different conceptions of uncertainty. On the one hand, Keynes and Knight held that the future was completely uncertain. We did not know the range of possibilities, and we did not know the probabilities to be assigned to these possibilities. As opposed to this, Ramsey and De-Finetti argued that rational decision making requires knowledge of all possible future outcomes, as well as their probabilities. This second conception, that we have knowledge of future outcomes and their probabilities…
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