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Awareness Of Unawareness: A Theory Of Decision Making In The Face Of Ignorance

Author

Listed:
  • Edi Karni

    (Johns Hopkins University)

  • Marie-Louise Viero

    (Queen's University)

Abstract

In the wake of growing awareness, decision makers anticipate that they might acquire knowledge that, in their current state of ignorance, is unimaginable. Supposedly, this anticipation manifests itself in the decisionmakers' choice behavior. In this paper we model the anticipation of growing awareness, lay choice-based axiomatic foundations to a subjective expected utility representation of beliefs about the likelihood of discoveringunknown consequences, and assign utility to consequences that are not only unimaginable but may also be nonexistent. In so doing, we maintain the flavor of reverse Bayesianism of Karni and Vierø (2013, 2015).

Suggested Citation

  • Edi Karni & Marie-Louise Viero, 2014. "Awareness Of Unawareness: A Theory Of Decision Making In The Face Of Ignorance," Working Paper 1322, Economics Department, Queen's University.
  • Handle: RePEc:qed:wpaper:1322
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Awareness; Unawareness; Ignorance; Reverse Bayesianism; Utility of undescribable consequences;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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