 Uncertainty from the small to the largeWenfeng Qiu and David S. Ahn Journal of Economic Theory, 2021, vol. 198, issue C Abstract: Related decisions are often observed in isolation without direct measurement of correlation in beliefs across state spaces or complementarity in tastes across prize spaces. We introduce a novel model with two decision problems with distinct states and prizes, which we call small worlds, without observation of bets that are contingent on the realization of both worlds. We characterize an appropriate version of subjective expected utility, where choices are made as if there is a joint distribution over the product of the state spaces and a joint utility index over pairs of prizes from both prize spaces. Turning to identification, the joint utility index over pairs of prizes and the marginal belief over each small world is identified, but the uniqueness of the joint distribution is more subtle. If the utility index is separable across prize spaces, then the correlation across state spaces is unidentified; but if there is any complementarity across prizes, then the joint distribution is exactly identified. Keywords: Uncertainty; Subjective expected utility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001848 DOI: 10.1016/j.jet.2021.105367 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.