A Preferences-Based Approach to Subjective Probability Estimation
Following the ideas of professor Raiffa, we can have the same attitude toward the subjective probabilities as with the objective probabilities, and we can use them freely in the theoretical constructions of the von Newman Utility theory. This is the subject of the chapter, evaluation of the subjective probability with the use of the stochastic programming. The probability is measured in an absolute scale in the context of the probability and measurement theory. Because of this, we can use the gambling approach to estimate the DM’s subjective probability as in the utility evaluations. Once again the authors solve the problem of best separation by using stochastic methods of the sets Au* and Bu*, (Au*nBu*)?Ø)). The difference with the previous chapter is that now they seek the existence of number (p), and not of function. This makes the problem easier to solve. However, the question remains the same, elimination of errors and uncertainty, and the way this is achieved in the stochastic programming.