"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|
|Publication status:||Forthcoming in American Economic Review|
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- Grant, Simon & Quiggin, John, 2009.
"Inductive Reasoning About Unawareness,"
Risk and Sustainable Management Group Working Papers
151188, University of Queensland, School of Economics.
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"Theory of Decision under Uncertainty,"
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Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
52, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Burkhard Schipper, 2013.
"Awareness-dependent subjective expected utility,"
International Journal of Game Theory,
Springer;Game Theory Society, vol. 42(3), pages 725-753, August.
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- Eddie Dekel & Barton L. Lipman & Aldo Rustichini, 1998. "Standard State-Space Models Preclude Unawareness," Econometrica, Econometric Society, vol. 66(1), pages 159-174, January.
- 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.
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- Halpern, Joseph Y., 2001.
"Alternative Semantics for Unawareness,"
Games and Economic Behavior,
Elsevier, vol. 37(2), pages 321-339, November.
- Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
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