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Awareness-dependent subjective expected utility

  • Burkhard Schipper

    ()

We develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz et al. (J Econ Theory 130:78–94, 2006 ; Games Econ Behav 62:304–324, 2008 ; Unawareness, beliefs, and speculative trade. University of California, Davis, 2011a ) 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. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00182-012-0321-2
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Article provided by Springer & Game Theory Society in its journal International Journal of Game Theory.

Volume (Year): 42 (2013)
Issue (Month): 3 (August)
Pages: 725-753

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Handle: RePEc:spr:jogath:v:42:y:2013:i:3:p:725-753
DOI: 10.1007/s00182-012-0321-2
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  1. Kim-Sau Chung & Oliver Board, 2007. "Object-Based Unawareness," Working Papers 2007-2, University of Minnesota, Department of Economics, revised 24 Aug 2007.
  2. Martin Meier & Burkhard C. Schipper, 2013. "Speculative Trade under Unawareness: The Infinite Case," Working Papers 102, University of California, Davis, Department of Economics.
  3. Grant, Simon & Quiggin, John, 2012. "Inductive Reasoning About Unawareness," Risk and Sustainable Management Group Working Papers 151202, University of Queensland, School of Economics.
  4. Blume, Lawrence & Easley, David & Halpern, Joseph Y., 2009. "Constructive Decision Theory," Economics Series 246, Institute for Advanced Studies.
  5. Burkhard C. Schipper & Martin Meier & Aviad Heifetz, 2005. "A Canonical Model for Interactive Unawareness," Working Papers 57, University of California, Davis, Department of Economics.
  6. Heinsalu, Sander, 2012. "Equivalence of the information structure with unawareness to the logic of awareness," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2453-2468.
  7. Halpern, Joseph Y., 2001. "Alternative Semantics for Unawareness," Games and Economic Behavior, Elsevier, vol. 37(2), pages 321-339, November.
  8. repec:pit:wpaper:379 is not listed on IDEAS
  9. Burkhard C. Schipper & Oliver Board & Kim-Sau Chung, 2009. "Two Models of Unawareness: Comparing the object-based and subjective-state-space approaches," Working Papers 93, University of California, Davis, Department of Economics.
  10. Morris, Stephen, 1996. "The Logic of Belief and Belief Change: A Decision Theoretic Approach," Journal of Economic Theory, Elsevier, vol. 69(1), pages 1-23, April.
  11. HEIFETZ, Aviad & MEIER, Martin & SCHIPPER, Burkhard C., 2004. "Interactive unawareness," CORE Discussion Papers 2004059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Spyros Galanis, 2013. "Unawareness of theorems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(1), pages 41-73, January.
  13. Jing Li, 2008. "A Note on Unawareness and Zero Probability," PIER Working Paper Archive 08-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  14. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
  15. David S. Ahn & Haluk Ergin, 2010. "Framing Contingencies," Econometrica, Econometric Society, vol. 78(2), pages 655-695, 03.
  16. repec:pit:wpaper:378 is not listed on IDEAS
  17. Li, Jing, 2009. "Information structures with unawareness," Journal of Economic Theory, Elsevier, vol. 144(3), pages 977-993, May.
  18. Schipper, Burkhard C, 2011. "Preference-Based Unawareness," MPRA Paper 30221, University Library of Munich, Germany.
  19. Rubinstein, Ariel, 1991. "Comments on the Interpretation of Game Theory," Econometrica, Econometric Society, vol. 59(4), pages 909-24, July.
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