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The Predictive Role of Counterfactuals

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  • Di Tillio, Alfredo
  • Gilboa, Itzhak
  • Samuelson, Larry

Abstract

We suggest a model that describes how counterfactuals are con- structed and justied. The model can describe how counterfactual beliefs are updated given the unfolding of actual history. It also al- lows us to examine the use of counterfactuals in prediction, and to show that a logically omniscient reasoner gains nothing from using counterfactuals for prediction.

Suggested Citation

  • Di Tillio, Alfredo & Gilboa, Itzhak & Samuelson, Larry, 2011. "The Predictive Role of Counterfactuals," Foerder Institute for Economic Research Working Papers 275754, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275754
    DOI: 10.22004/ag.econ.275754
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    References listed on IDEAS

    as
    1. Stalnaker, Robert, 1996. "Knowledge, Belief and Counterfactual Reasoning in Games," Economics and Philosophy, Cambridge University Press, vol. 12(2), pages 133-163, October.
    2. Battigalli, Pierpaolo & Siniscalchi, Marciano, 1999. "Hierarchies of Conditional Beliefs and Interactive Epistemology in Dynamic Games," Journal of Economic Theory, Elsevier, vol. 88(1), pages 188-230, September.
    3. Samet, Dov, 1996. "Hypothetical Knowledge and Games with Perfect Information," Games and Economic Behavior, Elsevier, vol. 17(2), pages 230-251, December.
    4. Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
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