IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1812.07414.html
   My bibliography  Save this paper

Causality: a decision theoretic approach

Author

Listed:
  • Pablo Schenone

Abstract

We propose a decision-theoretic model akin to Savage (1972) that is useful for defining causal effects. Within this framework, we define what it means for a decision maker (DM) to act as if the relation between the two variables is causal. Next, we provide axioms on preferences and show that these axioms are equivalent to the existence of a (unique) Directed Acyclic Graph (DAG) that represents the DM's preference. The notion of representation has two components: the graph factorizes the conditional independence properties of the DM's subjective beliefs, and arrows point from cause to effect. Finally, we explore the connection between our representation and models used in the statistical causality literature (for example, Pearl (1995)).

Suggested Citation

  • Pablo Schenone, 2018. "Causality: a decision theoretic approach," Papers 1812.07414, arXiv.org, revised Apr 2020.
    • Handle: RePEc:arx:papers:1812.07414
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1812.07414
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ran Spiegler, 2016. "Bayesian Networks and Boundedly Rational Expectations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1243-1290.
    2. James J. Heckman & Seong Hyeok Moon & Rodrigo Pinto & Peter Savelyev & Adam Yavitz, 2010. "A New Cost-Benefit and Rate of Return Analysis for the Perry Preschool Program: A Summary," NBER Working Papers 16180, National Bureau of Economic Research, Inc.
    3. Ran Spiegler, 2017. "“Data Monkeys”: A Procedural Model of Extrapolation from Partial Statistics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1818-1841.
    4. Machina, Mark J & Schmeidler, David, 1992. "A More Robust Definition of Subjective Probability," Econometrica, Econometric Society, vol. 60(4), pages 745-780, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.
    2. Esponda, Ignacio & Pouzo, Demian & Yamamoto, Yuichi, 2021. "Asymptotic behavior of Bayesian learners with misspecified models," Journal of Economic Theory, Elsevier, vol. 195(C).
    3. Ignacio Esponda & Demian Pouzo & Yuichi Yamamoto, 2019. "Asymptotic Behavior of Bayesian Learners with Misspecified Models," Papers 1904.08551, arXiv.org, revised Oct 2019.
    4. Spiegler, Ran, 2018. "News and Archival Information in Games," CEPR Discussion Papers 12805, C.E.P.R. Discussion Papers.
    5. Andrew Ellis & Heidi Christina Thysen, 2021. "Subjective Causality in Choice," Papers 2106.05957, arXiv.org, revised Dec 2022.
    6. Cerreia-Vioglio, Simone & Maccheroni, Fabio & Marinacci, Massimo & Montrucchio, Luigi, 2012. "Probabilistic sophistication, second order stochastic dominance and uncertainty aversion," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 271-283.
    7. Chateauneuf, Alain & Eichberger, Jurgen & Grant, Simon, 2007. "Choice under uncertainty with the best and worst in mind: Neo-additive capacities," Journal of Economic Theory, Elsevier, vol. 137(1), pages 538-567, November.
    8. Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    9. Ghirardato, Paolo & Marinacci, Massimo, 2002. "Ambiguity Made Precise: A Comparative Foundation," Journal of Economic Theory, Elsevier, vol. 102(2), pages 251-289, February.
    10. Jewitt, Ian & Mukerji, Sujoy, 2017. "Ordering ambiguous acts," Journal of Economic Theory, Elsevier, vol. 171(C), pages 213-267.
    11. Foster, Gigi & Frijters, Paul & Schaffner, Markus & Torgler, Benno, 2018. "Expectation formation in an evolving game of uncertainty: New experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 379-405.
    12. Yaron Azrieli & Christopher P. Chambers & Paul J. Healy, 2020. "Incentives in experiments with objective lotteries," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 1-29, March.
    13. Itzhak Gilboa & Offer Lieberman & David Schmeidler, 2012. "On the Definition of Objective Probabilities by Empirical Similarity," World Scientific Book Chapters, in: Case-Based Predictions An Axiomatic Approach to Prediction, Classification and Statistical Learning, chapter 11, pages 259-280, World Scientific Publishing Co. Pte. Ltd..
    14. Dominiak, Adam & Duersch, Peter & Lefort, Jean-Philippe, 2012. "A dynamic Ellsberg urn experiment," Games and Economic Behavior, Elsevier, vol. 75(2), pages 625-638.
    15. Robert Nau, 2001. "De Finetti was Right: Probability Does Not Exist," Theory and Decision, Springer, vol. 51(2), pages 89-124, December.
    16. Yoram Halevy & Vincent Feltkamp, 2005. "A Bayesian Approach to Uncertainty Aversion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 449-466.
    17. Mohammed Abdellaoui & Horst Zank, 2023. "Source and rank-dependent utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(4), pages 949-981, May.
    18. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    19. Tsoukias, Alexis, 2008. "From decision theory to decision aiding methodology," European Journal of Operational Research, Elsevier, vol. 187(1), pages 138-161, May.
    20. Hagenbach, Jeanne & Koessler, Frédéric, 2020. "Cheap talk with coarse understanding," Games and Economic Behavior, Elsevier, vol. 124(C), pages 105-121.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:1812.07414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.