Subjective Contingencies and Limited Bayesian Updating

Stefania Minardi and Andrei Savochkin

No 1203, HEC Research Papers Series from HEC Paris

Abstract: We depart from Savage’s (1954) common state space assumption and introduce a model that allows for a subjective understanding of uncertainty. Within the revealed preference paradigm, we uniquely identify the agent’s subjective state space via her preferences conditional on incoming information. According to our representation, the agent’s subjective contingencies are coarser than the analyst’s states; she uses an additively separable utility with respect to her set of contingencies; and she adopts an updating rule that follows the Bayesian spirit but is limited by her perception of uncertainty. We illustrate our theory with an application to the Confirmatory Bias.

Keywords: understanding of uncertainty; subjective state space; non-Bayesian updating (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2017-05-01
New Economics Papers: this item is included in nep-mic and nep-upt
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2962260 Full text (application/pdf)

Related works:
Journal Article: Subjective contingencies and limited Bayesian updating (2019)
Working Paper: Subjective Contingencies and Limited Bayesian Updating (2017)
Working Paper: Subjective Contingencies and Limited Bayesian Updating (2016)
Working Paper: Subjective Contingencies and Limited Bayesian Updating (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1203

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().