Second-Order Induction and Agreement

Rossella Argenziano and Itzhak Gilboa

No 1221, HEC Research Papers Series from HEC Paris

Abstract: Agents make predictions based on similar past cases. The notion of similarity is itself learnt from experience by "second-order induction": past cases inform agents also about the relative importance of various attributes in judging similarity. However, there may be multiple "optimal" similarity functions for explaining past data. Moreover, the computation of the optimal similarity function is NP-Hard. We offer conditions under which rational agents who have access to the same observations are likely to converge on the same predictions, and conditions under which they may entertain different probabilistic beliefs.

Keywords: second-order induction (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2017-07-01
New Economics Papers: this item is included in nep-mic
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Working Paper: Second-Order Induction and Agreement (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1221

DOI: 10.2139/ssrn.3009169

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