Awareness-Dependent Subjective Expected Utility
AbstractWe develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz, Meier, and Schipper (2006, 2008, 2009) 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 at Davis, Department of Economics in its series Working Papers with number 10-22.
Date of creation: Dec 2010
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- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-05 (All new papers)
- NEP-EVO-2011-02-05 (Evolutionary Economics)
- NEP-GTH-2011-02-05 (Game Theory)
- NEP-MIC-2011-02-05 (Microeconomics)
- NEP-UPT-2011-02-05 (Utility Models & Prospect Theory)
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- Schipper, Burkhard C., 2011.
11-6, University of California at Davis, Department of Economics.
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