A behavioral definition of unforeseen contingencies
Journal of Economic Theory, 2018, vol. 175, issue C, 265-290
The paper proposes a choice-theoretic definition of an unforeseen event and a model of behavior that accommodates such events. The analysis presumes an individual who is aware of their unawareness, which explains why all unforeseen events in this paper are non-null. Relative to existing work, the main contribution is to establish a distinction between unforeseen events and events whose likelihood is ambiguous. This is achieved by adopting a dynamic choice setting.
Keywords: Dynamic choice; Unforeseen events; Ambiguity aversion (search for similar items in EconPapers)
JEL-codes: D15 D81 D84 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:175:y:2018:i:c:p:265-290
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