Introspective unawareness and observable choice

Evan Piermont ()

Games and Economic Behavior, 2017, vol. 106, issue C, 134-152

Abstract: This paper explores the behavior of a decision maker (DM) who is unaware of some of the options available to her. The DM has a preference over consumption alternatives that is informed by her epistemic state: what she knows and what she is aware of. The main result is a characterization, via observable choice, of introspective unawareness—a DM who is both unaware of some information and aware she is unaware. Under dynamic introspective unawareness, the DM is unwilling to commit to future choices, even when given the flexibility to write a contingent plan that executes a choice conditional on the realization of uncertain events. This is a behavior that cannot be explained by uncertainty alone (i.e., without appealing to unawareness). In a simple strategic environment, the acknowledgment of unawareness can lead to strategic concealment of choice objects (i.e., actions), in turn, leading to a desire for incomplete contracts.

Keywords: Unawareness; Uncertainty; Epistemic preferences; Dynamic choice (search for similar items in EconPapers)
JEL-codes: D01 D81 D83 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:106:y:2017:i:c:p:134-152

DOI: 10.1016/j.geb.2017.09.008

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