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A Theory of Subjective Learning, Third Version

Author

Listed:
  • David Dillenberger

    () (Department of Economics, University of Pennsylvania)

  • Juan Sebastian Lleras

    () (Department of Social and Decision Sciences, Carnegie Mellon University)

  • Philipp Sadowski

    () (Department of Economics, Duke University)

  • Norio Takeoka

    () (Department of Economics, Yokohama National University)

Abstract

We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. One representation uniquely identifies information as a probability measure over posteriors and the other identifies information as a partition of the state space. We compare individuals who expect to learn differently in terms of their preference for flexibility. On the extended domain of dated-menus, we show how to accommodate gradual learning over time by means of a subjective filtration.

Suggested Citation

  • David Dillenberger & Juan Sebastian Lleras & Philipp Sadowski & Norio Takeoka, 2012. "A Theory of Subjective Learning, Third Version," PIER Working Paper Archive 13-067, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Sep 2013.
    • Handle: RePEc:pen:papers:13-067
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    File URL: https://economics.sas.upenn.edu/sites/default/files/filevault/13-067.pdf
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    References listed on IDEAS

    as
    1. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
    2. Kreps, David M, 1979. "A Representation Theorem for "Preference for Flexibility"," Econometrica, Econometric Society, vol. 47(3), pages 565-577, May.
    3. Hyogo, Kazuya, 2007. "A subjective model of experimentation," Journal of Economic Theory, Elsevier, vol. 133(1), pages 316-330, March.
    4. Eddie eckel & Barton L Lipman & Aldo Rustichini & Todd Sarver, 2005. "Representing Preferences with a Unique Subjective State Space: Corrigendum," Boston University - Department of Economics - Working Papers Series WP2005-042, Boston University - Department of Economics.
    5. Takeoka, Norio, 2007. "Subjective probability over a subjective decision tree," Journal of Economic Theory, Elsevier, vol. 136(1), pages 536-571, September.
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    Citations

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    Cited by:

    1. Higashi, Youichiro & Hyogo, Kazuya & Takeoka, Norio, 2014. "Stochastic endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 77-92.
    2. Riella, Gil, 2013. "Preference for Flexibility and Dynamic Consistency," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2467-2482.

    More about this item

    Keywords

    Subjective learning; partitional learning; preference for flexibility; resolution of uncertainty; valuing more binary bets; subjective filtration; dated-menus;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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