Bayesian Decision Theory and the Representation of Beliefs
AbstractIn this paper, I present a Bayesian decision theory and define choice-based subjective probabilities that faithfully represent Bayesian decision makersâ prior and posterior beliefs regarding the likelihood of the possible effects contingent on his actions. I argue that no equivalent results can be obtained in Savageâs (1954) subjective expected utility theory and give an example illustrating the potential harm caused by ascribing to a decision maker subjective probabilities that do not represent his beliefs.
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Bibliographic InfoPaper provided by UCLA Department of Economics in its series Levine's Bibliography with number 321307000000000776.
Date of creation: 26 Jan 2007
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Other versions of this item:
- Edi Karni, 2007. "Bayesian Decision Theory and the Representation of Beliefs," Discussion Paper Series dp444, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- NEP-ALL-2007-02-10 (All new papers)
- NEP-GTH-2007-02-10 (Game Theory)
- NEP-HPE-2007-02-10 (History & Philosophy of Economics)
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.:
- Karni, Edi, 2006.
"Subjective expected utility theory without states of the world,"
Journal of Mathematical Economics,
Elsevier, vol. 42(3), pages 325-342, June.
- Edi Karni, 2005. "Subjective Expected Utility Theory without States of the World," Economics Working Paper Archive 523, The Johns Hopkins University,Department of Economics.
- Nau, Robert F, 1995. "Coherent Decision Analysis with Inseparable Probabilities and Utilities," Journal of Risk and Uncertainty, Springer, vol. 10(1), pages 71-91, January.
- Karni, E. & Schmeidler, D., 1991.
"On the Uniqueness of Subjective Probabilities,"
1-92, Tel Aviv - the Sackler Institute of Economic Studies.
- Wakker, Peter, 1987. "Subjective probabilities for state dependent continuous utility," Mathematical Social Sciences, Elsevier, vol. 14(3), pages 289-298, December.
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- Karni, Edi, 2007.
"Foundations of Bayesian theory,"
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Elsevier, vol. 132(1), pages 167-188, January.
- Costis Skiadas, 1997. "Conditioning and Aggregation of Preferences," Econometrica, Econometric Society, vol. 65(2), pages 347-368, March.
- Karni, Edi, 1996. "Probabilities and Beliefs," Journal of Risk and Uncertainty, Springer, vol. 13(3), pages 249-62, November.
- Grossman, Sanford J & Hart, Oliver D, 1983.
"An Analysis of the Principal-Agent Problem,"
Econometric Society, vol. 51(1), pages 7-45, January.
- Sanford Grossman & Oliver Hart, . "An Analysis of the Principal-Agent Problem," Rodney L. White Center for Financial Research Working Papers 15-80, Wharton School Rodney L. White Center for Financial Research.
- Karni, Edi, 1993. "A Definition of Subjective Probabilities with State-Dependent Preferences," Econometrica, Econometric Society, vol. 61(1), pages 187-98, January.
- Sadowski, Philipp, 2008. "Conditional Preference for Flexibility: Eliciting Beliefs from Behavior," MPRA Paper 8614, University Library of Munich, Germany.
- Edi Karni, 2008. "Agency theory: choice-based foundations of the parametrized distribution formulation," Economic Theory, Springer, vol. 36(3), pages 337-351, September.
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