Bayesian decision theory with action-dependent probabilities and risk attitudes

Edi Karni

Economic Theory, 2013, vol. 53, issue 2, 335-356

Abstract: This paper extends the work of Karni (Econ Theory 48:125–146, 2011 ) to allow for the possibility that decision makers’ effect-dependent risk attitudes are also affected by their actions. This extension is essential for modeling decision situations in which actions have a monetary dimension that creates interaction between actions and wealth. Copyright Springer-Verlag 2013

Keywords: Bayesian decision theory; Subjective probabilities; Prior distributions; Beliefs; Constant utility bets; D80; D81; D82 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s00199-012-0692-4

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