Exchangeable capacities, parameters and incomplete theories

Larry Epstein and Kyoungwon Seo

Journal of Economic Theory, 2015, vol. 157, issue C, 879-917

Abstract: The de Finetti Theorem on exchangeable predictive priors is generalized to a framework where preference is represented by Choquet expected utility with respect to a belief function (a special capacity). The resulting model provides behavioral foundations for the decision-maker's subjective theory of the environment in which there are factors common to all experiments (or sources of uncertainty), called parameters, but in which her theory is incomplete in that knowledge of the parameter leaves idiosyncratic factors that vary across experiments in a way that is poorly understood.

Keywords: Ambiguity; Exchangeability; Maxmin expected utility; Parameters; Repeated experiments (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:157:y:2015:i:c:p:879-917

DOI: 10.1016/j.jet.2015.02.010

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