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An incomplete ignorance state in repeated-play decision making: A note on Bayesian decision-theoretical framework

Author

Listed:
  • Kobayashi, Yohei
  • Fujikawa, Takemi

Abstract

There has been much reported on decisions from experience, also referred to as decisions in a complete ignorance fashion. This note lays out a Bayesian decision-theoretical framework that provides a computable account for decisions from experience. To make the framework more tractable, this note sets up and examines decisions in a incomplete ignorance fashion. The current discussion asserts that well-known behavioural effects, such as the hot stove effect, and the Bayesian framework may lead to different predictions.

Suggested Citation

  • Kobayashi, Yohei & Fujikawa, Takemi, 2010. "An incomplete ignorance state in repeated-play decision making: A note on Bayesian decision-theoretical framework," MPRA Paper 28265, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:28265
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    File URL: https://mpra.ub.uni-muenchen.de/28265/1/MPRA_paper_28265.pdf
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    References listed on IDEAS

    as
    1. Takemi Fujikawa, 2009. "On the relative importance of the hot stove effect and the tendency to rely on small samples," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(5), pages 429-435, August.
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    More about this item

    Keywords

    Bayesian updating; complete ignorance; decisions from experience; incomplete ignorance;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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