"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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- Simon Grant & John Quiggin, 2009.
"Inductive reasoning about unawareness,"
Risk & Uncertainty Working Papers
WPR09_1, Risk and Sustainable Management Group, University of Queensland.
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- Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2006.
Journal of Economic Theory,
Elsevier, vol. 130(1), pages 78-94, September.
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"Alternative Semantics for Unawareness,"
Game Theory and Information
- Gilboa,Itzhak, 2009.
"Theory of Decision under Uncertainty,"
Cambridge University Press, number 9780521517324, December.
- Burkhard Schipper, 2011.
"Awareness-Dependent Subjective Expected Utility,"
1022, University of California, Davis, Department of Economics.
- Li, Jing, 2009. "Information structures with unawareness," Journal of Economic Theory, Elsevier, vol. 144(3), pages 977-993, May.
- 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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- Modica, Salvatore & Rustichini, Aldo, 1999. "Unawareness and Partitional Information Structures," Games and Economic Behavior, Elsevier, vol. 27(2), pages 265-298, May.
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