Evidence Theory: A Mathematical Framework for Unpredictable Hypotheses.

Shafer’s evidence theory is a branch of the mathematics of uncertain reasoning that allows for novel possibilities to be conceived by a decision-maker. Many of its findings exhibit striking similarities with an alternative decision theory purported by Shackle in the 1950s, before expected utility maximisation monopolised the scene. Evidence theory does not attempt to formalise the emergence of novelties, but it is a suitable framework for reconstructing the formation of beliefs when novelties appear. An application to decision-making in the biotech and pharmaceutical industry illustrates the potentialities of evidence theory, as well as its shortcomings.