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Awareness of Unawareness: A Theory of Decision Making in the Face of Ignorance

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  • Karni, Edi
  • VierÃÿ, Marie-Louise

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 decision makers' 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 discovering unknown consequences, and assign utility to consequences that are not only unimaginable but may also be nonexistent. In so doing, we maintain the avor of reverse Bayesianism of Karni and Viero

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  • Karni, Edi & VierÃÿ, Marie-Louise, 2014. "Awareness of Unawareness: A Theory of Decision Making in the Face of Ignorance," Queen's Economics Department Working Papers 274647, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274647
    DOI: 10.22004/ag.econ.274647
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