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Subjectivity in Inductive Inference




This paper examines circumstances under which subjectivity enhances the effectiveness of inductive reasoning. We consider a game in which Fate chooses a data generating process and agents are characterized by inference rules that may be purely objective (or data-based) or may incorporate subjective considerations. The basic intuition is that agents who invoke no subjective considerations are doomed to "overfit" the data and therefore engage in ineffective learning. The analysis places no computational or memory limitations on the agents -- the role for subjectivity emerges in the presence of unlimited reasoning powers.

Suggested Citation

  • Itzhak Gilboa & Larry Samuelson, 2009. "Subjectivity in Inductive Inference," Cowles Foundation Discussion Papers 1725, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1725

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    References listed on IDEAS

    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, Oxford University Press, vol. 69(1), pages 99-118.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
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    Cited by:

    1. Gilboa, Itzhak & Samuelson, Larry & Schmeidler, David, 2013. "Dynamics of inductive inference in a unified framework," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1399-1432.

    More about this item


    Induction; Simplicity; Bayesian learning;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C0 - Mathematical and Quantitative Methods - - General

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