Adam Smith in Love: A Bayesian Rabbit Hole

Check out footnote 82 of the latest draft of my “Adam Smith in Love” paper; also, notice that there are four “baby footnotes” within my main footnote!

“As an aside, to the extent we are unable to reliably or accurately measure a person’s subjective probability of falling in love or getting married with someone, Adam Smith may have been right to describe romantic love as a ‘ridiculous’ passion! Beginning with Frank Ramsey (b. 1903, d. 1930) and Bruno de Finetti (b. 1906, d. 1985), probability theorists have developed a sophisticated method involving hypothetical bets or equivalence lotteries for measuring a person’s true ‘subjective probability’ of the future likelihood of an uncertain event. (See, e.g., Dawid, 2004, pp. 45-46.) Today, this method is sometimes referred to as a ‘de Finetti game’ in honor of Bruno de Finetti. (See, e.g., Aczel, 2004, pp. 21-24; see also Devlin, 2008, pp. 162-164) The concept of subjective probability corresponds to personal beliefs; for example, the subjective probability of event X is simply one’s personal belief or private estimate that event X will or will not occur. (See, e.g., Guerra-Pujol, 2019, p. 16.) In summary, the methods for measuring subjective probability developed by Frank Ramsey and Bruno de Finetti involve converting one’s probability estimate about event X into a wager, but according to one scholar (Aczel, 2004, pp. 23-24, emphasis added), this method ‘tends to fail in matters that are very important to people–for example, love.’ I would like to pursue Amir D. Aczel’s observation further, but such a pursuit would lead me down a Bayesian rabbit hole and distract us from the immediate subject of this paper.”

Screen Shot 2020-11-19 at 8.52.26 AM

Amir D. Aczel, Chance: a guide to gambling, love, the stock market, and just about everything else, Thunder’s Mouth Press (2004).

A. P. Dawid, “Probability, causality, and the empirical world,” Statistical Science, Vol. 19, No. 1 (2004), pp. 44-57.

Keith Devlin, The unfinished game: Pascal, Fermat, and the 17th-century letter that made the modern world, Basic Books (2008).

F. E. Guerra-Pujol, “The case for Bayesian judges: putting Posner and Vermuele into practice,” Journal of Legal Metrics, Vol. 6, No. 1 (2019), pp. 13-20.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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