42. “Single Trial Probability Applications: Can Subjectivity Evade Frequency Limitations?”
by David Howden
Abstract: Frequency probability theorists define an event’s probability distribution as the limit of a repeated set of trials belonging to a homogeneous collective. The subsets of this collective are events which we have deficient knowledge about on an individual level, although for the larger collective we have knowledge its aggregate behavior. Hence, probabilities can only be achieved through repeated trials of these subsets arriving at the established frequencies that define the probabilities. Crovelli (2009) argues that this is a mistaken approach, and that a subjective assessment of individual trials should be used instead. Bifurcating between the two concepts of risk and uncertainty, Crovelli first asserts that probability is the tool used to manage uncertain situations, and then attempts to rebuild a definition of probability theory with this in mind. We show that such an attempt has little to gain, and results in an indeterminate application of entrepreneurial forecasting to uncertain decisions—a process far-removed from any application of probability theory.
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[...] “Single Trial Probability Applications: Can Subjectivity Evade Frequency Limi…“, by David [...]
Peter Klein on the same topic.
http://mises.org/daily/3779
Also “On Popper, Probabilities and Propensities”
by Jochen Runde; Review of Social Economy, Vol. 54, 1996.
“A puzzling feature of the many contributions in economics that refer to Karl Popper’s writings is how few of them mention his propensity interpretation of probability.(1) This may well be because this interpretation was initially proposed with physics in mind (Popper 1967). Yet by the end of his life it had become clear that his propensity theory had developed into something with much wider implications. As he puts in his last book, after he had first proposed it in the 1950s the “theory had further grown so that it was only in the last year that I realized its cosmological significance. I mean that we live in a worm of propensities, and that this fact makes our world both more interesting and more homely than the world as seen by earlier states of the sciences” (Popper 1990: 9). My aim in this paper is to document this development, to point out its affinities with Critical Realism (CR), and to raise some implications for two prominent Popperian themes in economics.”
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