Subjective probabilities


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Subjective probabilities

Probabilities that are determined subjectively (for example, on the basis of judgment rather than statistical sampling).

Subjective Probabilities

One's personal judgment about the outcome of a particular investment. At its most extreme, relying on subjective probabilities represents the exact opposite of a formula plan, which seeks to eliminate all personal judgments and biases from investing. By definition, one cannot calculate subjective probabilities because they are based ultimately on one's feeling. Most investors rely on a combination of subjective probabilities and more objective calculations when making investment decisions.
References in periodicals archive ?
The SEV-maximizing action by the Agent as determined using the Patient's subjective probabilities at the time of choice might not be the SEV-maximizing action as determined using the Patient's subjective probabilities at some other time.
An unexpected finding from the current study was that the average subjective probabilities after reinforcing and nonreinforcing trials (wins and streaks of losses) were in direct contrast to nonbehavioral hypothesized notions of a "gambler's fallacy" (Yackulic & Kelly, 1984).
In what follows, it will be convenient to consider the Principal Principle as being made up of two parts: a standard of admissibility, and a rule for setting subjective probabilities that must be followed if all evidence meets this standard.
1978) have all studied the ability of individuals to transform objective probabilities to subjective probabilities.
In addition, religionists with different subjective probabilities of believing in the existence of an afterlife do not make significantly different contributions or volunteer differently, except in the case of the contribution behavior of religionists with sufficiently large afterlife rewards.
In Jeffrey's example no proposition has its probability changed to 1, and his discussion therefore raises the novel question: given that the subjective probabilities of propositions [E.
However, subjective probabilities should not show a systematic bias towards overestimation (optimism) or underestimation (pessimism).
The essence of these findings is that although people can estimate subjective probabilities quite well (Lichtenstein and Fischhoff 1977), they tend to be overconfident in making their estimations and tend to believe they know more than they actually do, leading to systematic biases in the estimates (Lichtenstein, Fischhoff, and Phillips 1978).
In a parallel development, Ramsey (1931) showed that subjective probabilities could be derived from axioms about choice among gambles.
Finally, an additional element of realism is introduced by noting that the subjective probabilities of a nuclear accident will tend to increase over time as the reactor ages.
Despite the fact that there typically exists a small favorite-long shot bias in win betting, probabilities determined by the bettors, or subjective probabilities, can be a good approximation of a horse's actual probability of winning.
But using the looseness in the definition of probability to allow self assessments of beliefs in terms of subjective probabilities would run into trouble with the definition of knowledge.

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