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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
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  1. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2005. "Interactive Unawareness," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 52, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  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. David S. Ahn & Haluk Ergin, 2010. "Framing Contingencies," Econometrica, Econometric Society, vol. 78(2), pages 655-695, 03.
  4. Aviad Heifetz & Martin Meier & Burkhard C. Schipper, 2005. "A Canonical Model for Interactive Unawareness," Bonn Econ Discussion Papers bgse23_2005, University of Bonn, Germany.
  5. Schipper, Burkhard C, 2011. "Preference-Based Unawareness," MPRA Paper 30221, University Library of Munich, Germany.
  6. Halpern, Joseph Y., 2001. "Alternative Semantics for Unawareness," Games and Economic Behavior, Elsevier, vol. 37(2), pages 321-339, November.
  7. Simon Grant & John Quiggin, 2013. "Inductive reasoning about unawareness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 717-755, November.
  8. Kim-Sau Chung & Oliver Board, 2007. "Object-Based Unawareness," Working Papers 2007-2, University of Minnesota, Department of Economics, revised 24 Aug 2007.
  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. repec:pit:wpaper:378 is not listed on IDEAS
  11. 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.
  12. 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.
  13. Galanis, Spyros, 2007. "Unawareness of theorems," Discussion Paper Series In Economics And Econometrics 51816, Economics Division, School of Social Sciences, University of Southampton.
  14. Blume, Lawrence & Easley, David & Halpern, Joseph Y., 2009. "Constructive Decision Theory," Economics Series 246, Institute for Advanced Studies.
  15. 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.
  16. Rubinstein, Ariel, 1991. "Comments on the Interpretation of Game Theory," Econometrica, Econometric Society, vol. 59(4), pages 909-24, July.
  17. repec:pit:wpaper:379 is not listed on IDEAS
  18. Li, Jing, 2009. "Information structures with unawareness," Journal of Economic Theory, Elsevier, vol. 144(3), pages 977-993, May.
  19. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
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