Observability and “Second-Order Acts"
This note questions the behavioral content of second-order acts and their use in decision theoretic models. We show that there can be no verification mechanism to determine what the decision maker receives under a second-order act. This impossibility applies even in idealized repeated experiments where infinite data can be observed. JEL Classification Numbers:
|Date of creation:||01 Dec 2010|
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Web page: http://www.kellogg.northwestern.edu/research/math/
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"A smooth model of decision making under ambiguity,"
ICER Working Papers - Applied Mathematics Series
11-2003, ICER - International Centre for Economic Research, revised Apr 2003.
- Chew, Soo Hong & Sagi, Jacob S., 2008. "Small worlds: Modeling attitudes toward sources of uncertainty," Journal of Economic Theory, Elsevier, vol. 139(1), pages 1-24, March.
- Simon Grant & Ben Polak & Tomasz Strzalecki, 2010. "Second-Order Expected Utility," Working Paper 8340, Harvard University OpenScholar.
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