Itzhak Gilboa (KGSM-MEDS, Northwestern University, Leverone Hall, Evanston, IL 60208, USA) David Schmeidler (Tel Aviv University and Ohio State University, Department of Economics, Arps Hall, 1945 N. High St., Columbus, OH 43210, USA)
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Case-Based Decision Theory (CBDT) postulates that decision making under uncertainty is based on analogies to past cases. In its original version, it suggests that each of the available acts is ranked according to its own performance in similar decision problems encountered in the past.
The purpose of this paper is to extend CBDT to deal with cases in which the evaluation of an act may also depend on past performance of different, but similar acts. To this end we provide a behavioral axiomatic definition of the similarity function over problem-act pairs (and not over problem pairs alone, as in the original model).
We propose a model in which preferences are context-dependent. For each conceivable history of outcomes (to be thought of as the "context" of decision) there is a preference order over acts. If these context-dependent preference relations satisfy our consistency-across-contexts axioms, there is an essentially unique similarity function that represents these preferences via the (generalized) CBDT functional.
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Article provided by Springer in its journal Economic Theory.
Find related papers by JEL classification: D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Itzhak Gilboa & David Schmeidler, 1993.
"Case-Based Knowledge Representation,"
Discussion Papers
1053, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
[Downloadable!]
Itzhak Gilboa & David Schmeidler, 1993.
"Case-Based Consumer Theory,"
Discussion Papers
1025, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
[Downloadable!]
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Itzhak Gilboa & David Schmeidler, 1995.
"Case-Based Knowledge and Planning,"
Discussion Papers
1127, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
[Downloadable!]
Chambers, Christopher P. & Hayashi, Takashi, 2008.
"Choice and individual welfare,"
Working Papers
1286, California Institute of Technology, Division of the Humanities and Social Sciences.
[Downloadable!]