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Subjectivity in Inductive Inference

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  • Itzhak Gilboa

    () (Tel Aviv University [Tel Aviv], GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Larry Samuelson

    () (Department of Economics - Yale University [New Haven])

Abstract

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, 2012. "Subjectivity in Inductive Inference," Post-Print hal-00489433, HAL.
  • Handle: RePEc:hal:journl:hal-00489433
    DOI: 10.3982/TE845
    Note: View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-00489433
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    References listed on IDEAS

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    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

    Keywords

    induction; simplicity; Bayesian learning; prediction;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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