A Theory of Subjective Learning
AbstractWe study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive two utility representations of preferences over menus of acts that capture the individuals uncertainty about his future beliefs. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of more preference for flexibility via a subjective analogue of Blackwells (1951, 1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. We conclude by extending the basic model to accommodate an individual who expects to learn gradually over time by means of a subjective filtration.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 12-17.
Date of creation: 2012
Date of revision:
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Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
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Web page: http://econ.duke.edu/
Subjective learning; partitional learning; preference for flexibility; resolution of uncertainty; valuing more binary bets; subjective filtration;
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