Dynamics of Inductive Inference in a Unified Framework
AbstractWe present a model of inductive inference that includes, as special cases, Bayesian reasoning, case-based reasoning, and rule-based reasoning. This unified framework allows us to examine, positively or normatively, how the various modes of inductive inference can be combined and how their relative weights change endogenously. We establish conditions under which an agent who does not know the structure of the data generating process will decrease, over the course of her reasoning, the weight of credence put on Bayesian vs. non-Bayesian reasoning. We show that even random data can make certain theories seem plausible and hence increase the weight of rule-based vs. case-based reasoning, leading the agent in some cases to cycle between being rule-based and case-based. We identify conditions under which minmax regret criteria will not be effective.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1811.
Length: 43 pages
Date of creation: Jul 2011
Date of revision:
Publication status: Published in Journal of Economic Theory (July 2013), 148(4): 1399-1432
Note: CFP 1409
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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
More information through EDIRC
Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- Gilboa, Itzhak & Samuelson, Larry & Schmeidler, David, 2013. "Dynamics of inductive inference in a unified framework," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1399-1432.
- Itzhak Gilboa & Larry Samuelson & David Schmeidler, 2011. "Dynamics of Inductive Inference in a Unified Framework," Levine's Working Paper Archive 786969000000000156, David K. Levine.
- Itzhak Gilboa & Larry Samuelson & David Schmeidler, 2012. "Dynamics of Inductive Inference in a Unified Framework," Working Papers hal-00712823, HAL.
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-02 (All new papers)
- NEP-EVO-2011-08-02 (Evolutionary Economics)
- NEP-MIC-2011-08-02 (Microeconomics)
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