A Conditional Expected Utility Model for Myopic Decision Makers
AbstractThis article formulates and axiomatizes a conditional expected utility model that allows a decision maker to specify his actions in the form of partial rather than complete contingency plans and to simultaneously choose goals and actions in end-mean pairs. Both utility and probability are conditioned on selected goals and actions (g,a), and both are defined over the same set of possible (g,a)-conditioned events. For adaptive sequential decision problems, this symmetrical treatment of utility and probability permits agents to learn via "criterion filtering." That is, the expected utility criterion function can be directly updated in each decision period via transitional utility assessments in a manner analogous to Bayes' rule for updating probability distributions via transitional probability assessments. Annotated pointers to related work can be accessed here: http://www.econ.iastate.edu/tesfatsi/cfhome.htm
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11225.
Date of creation: 01 Jan 1980
Date of revision:
Publication status: Published in Theory and Decision 1980, vol. 12, pp. 185-206
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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behavioral economics; Bounded rationality; goals; Bayes' rule; criterion filtering;
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- C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
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