A Theory of Subjective Learning

David Dillenberger (), Philipp Sadowski (), Juan Lleras () and Norio Takeoka ()
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David Dillenberger: Department of Economics, University of Pennsylvania
Philipp Sadowski: Department of Economics, Duke University
Juan Lleras: Department of Social and Decision Sciences, CMU
Norio Takeoka: Department of Economics, Yokohama National University

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive two utility representations of preferences over menus of acts that capture the individual’s uncertainty about his future beliefs. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of “more preference for flexibility†via a subjective analogue of Blackwell’s (1951, 1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. We conclude by extending the basic model to accommodate an individual who expects to learn gradually over time by means of a subjective filtration.

Keywords: Subjective learning; partitional learning; preference for flexibility; resolution of uncertainty; valuing more binary bets; subjective filtration (search for similar items in EconPapers)
JEL-codes: D80 D81 D83 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-08-31
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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