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Case-based belief formation under ambiguity

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  • Eichberger, Jürgen
  • Guerdjikova, Ani

Abstract

In this paper, we consider a decision maker who tries to learn the distribution of outcomes from previously observed cases. For each observed database of cases the decision maker predicts a set of priors expressing his beliefs about the underlying probability distribution. We impose a version of the concatenation axiom introduced in Billot et al. (2005) which ensures that the sets of priors can be represented as a weighted sum of the observed frequencies of cases. The weights are the uniquely determined similarities between the observed cases and the case under investigation. The predicted probabilities, however, may vary with the number of observations. This generalization of Billot et al. (2005) allows one to model learning processes.

Suggested Citation

  • Eichberger, Jürgen & Guerdjikova, Ani, 2010. "Case-based belief formation under ambiguity," Mathematical Social Sciences, Elsevier, vol. 60(3), pages 161-177, November.
  • Handle: RePEc:eee:matsoc:v:60:y:2010:i:3:p:161-177
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Heinrich, Tobias, 2013. "Endogenous negative stereotypes: A similarity-based approach," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 45-54.
    2. Ayala Arad & Gabrielle Gayer, 2012. "Imprecise Data Sets as a Source of Ambiguity: A Model and Experimental Evidence," Management Science, INFORMS, vol. 58(1), pages 188-202, January.
    3. Bleile, Jörg, 2016. "Limited Attention in Case-Based Belief Formation," Center for Mathematical Economics Working Papers 518, Center for Mathematical Economics, Bielefeld University.
    4. Bleile, Jörg, 2016. "Categorization based Belief formations," Center for Mathematical Economics Working Papers 519, Center for Mathematical Economics, Bielefeld University.
    5. Eichberger, Jürgen & Guerdjikova, Ani, 2013. "Ambiguity, data and preferences for information – A case-based approach," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1433-1462.
    6. Bleile, Jörg, 2016. "Cautious Belief Formation," Center for Mathematical Economics Working Papers 507, Center for Mathematical Economics, Bielefeld University.

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