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

Author

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  • 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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    1. repec:cup:judgdm:v:4:y:2009:i:5:p:429-435 is not listed on IDEAS
    2. repec:cup:judgdm:v:4:y:2009:i:6:p:447-460 is not listed on IDEAS
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    More about this item

    Keywords

    Bayesian updating; complete ignorance; decisions from experience; incomplete ignorance;
    All these keywords.

    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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