An Analysis that Answers F.Y.Edgeworth's Question, Put to the Logicians and Philosophers Who Read the Journal Mind, Concerning the Importance of Evaluating the Role Played by Keynes's Conventional Coefficient of Risk and Weight, C, in Decision Making
19 Pages Posted: 1 Jul 2010
Date Written: June 29, 2010
In 1922, F.Y. Edgeworth asked the readers of the world’s leading philosophy journal Mind for help in analyzing Keynes’s conventional coefficient of risk and weight, c. Keynes had created the first decision rule in history that generalized the linear and additive expected value and expected utility rules to include non linearity and non additivity. Edgeworth received no answer from the readers of Mind. This paper shows why the c coefficient was so important and how Keynes integrated his weight of the evidence index, w, into his technical mathematical elasticity analysis in Chapter 21 and Section four of Chapter 15 of the General Theory.
It is also shown that Ramsey’s subjectivist, Bayesian approach is a special case of Keynes’s general theory of decision making under risk and uncertainty. Ramsey’s objections to Keynes’s approach is demonstrated to be baseless because it is based on the work of George Boole.
Keywords: Keynes, Edgeworth, conventional coefficient of risk and weight, Boole
JEL Classification: B16, C02, C10
Suggested Citation: Suggested Citation