"Reverse Bayesianism": A Choice-Based Theory of Growing Awareness
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."
|Date of creation:||Dec 2010|
|Date of revision:|
|Publication status:||Forthcoming in American Economic Review|
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- Simon Grant & John Quiggin, 2013.
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"Awareness-Dependent Subjective Expected Utility,"
1022, University of California, Davis, Department of Economics.
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"Alternative Semantics for Unawareness,"
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CORE Discussion Papers
2004059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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"Theory of Decision under Uncertainty,"
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- Ehud Lehrer & Roee Teper, 2014. "Extension Rules or What Would the Sage Do?," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 5-22, February.
- Eddie Dekel & Barton L. Lipman & Aldo Rustichini, 1998. "Standard State-Space Models Preclude Unawareness," Econometrica, Econometric Society, vol. 66(1), pages 159-174, January.
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- Li, Jing, 2009. "Information structures with unawareness," Journal of Economic Theory, Elsevier, vol. 144(3), pages 977-993, May.
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