Awareness-Dependent Subjective Expected Utility
AbstractWe develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz, Meier, and Schipper (2006, 2008, 2011a) as primitives in the Anscombe-Aumann approach to subjective expected utility. We observe that a decision maker is unaware of an event if and only if her choices reveal that the event is ``null'' and the negation of the event is ``null''. Moreover, we characterize ``impersonal'' expected utility that is behaviorally indistinguishable from awareness-dependent subject expected utility and assigns probability zero to some subsets of states that are not necessarily events. We discuss in what sense probability zero can model unawareness.
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Bibliographic InfoPaper provided by University of California, Davis, Department of Economics in its series Working Papers with number 1022.
Date of creation: 21 Dec 2011
Date of revision:
unawareness; awareness; unforeseen contingencies; null; probability zero; subjective probability; Anscombe-Aumann; small worlds;
Other versions of this item:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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- Schipper, Burkhard C, 2011.
30221, University Library of Munich, Germany.
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