The Maximum Entropy Principle in Decision Making Under Uncertainty: Special Cases Applicable to Developing Technologies

摘要

We consider situations in decision making which arise in the context of developing technologies. Specifically, we consider decision problems involving a finite number of known alternatives and states of nature and their associated payoffs, but where the probabilities of the states of nature are unknown. We indicate how the maximum entropy principle can be applied to those decision problems. We then prove three results that show a relationship between the preferences of the decision maker and the type of probability distribution that will be developed by the maximum entropy principle. Finally, numerical examples are provided to illustrate the results.