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"reverse Bayesianism": A Choice-based Theory Of Growing Awareness

Author

Listed:
  • Edi Karni

    (Johns Hopkins University)

  • Marie-Louise Viero

    (Queen's University)

Abstract

This paper introduces a new approach to modeling the expanding universe of decision makers in the wake of growing awareness, and invokes the axiomatic approach to model the evolution of decision makers' beliefs as awareness grows. The expanding universe is accompanied by extension of the set of acts, the preference relations over which are linked by a new axiom, invariant risk preferences, asserting that the ranking of lotteries is independent of the set of acts under consideration. The main results are representation theorems and rules for updating beliefs over expanding state spaces and null events that have the flavor of "reverse Bayesianism."

Suggested Citation

  • Edi Karni & Marie-Louise Viero, 2010. ""reverse Bayesianism": A Choice-based Theory Of Growing Awareness," Working Paper 1258, Economics Department, Queen's University.
  • Handle: RePEc:qed:wpaper:1258
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1258.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Awareness; unawareness; reverse Bayesianism; null events;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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