Demand-Theoretic Approach to Choice of Priors

Loran Chollete () and David Schmeidler
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Loran Chollete: UiS, Postal: University of Stavanger, NO-4036 Stavanger, Norway

No 2014/14, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: Decision theory has relatively little to say about the formal choice of priors. We pursue the issue of prior choice in a framework that builds on consumer theory. We analyze discovery decisions of a reasoner, in an environment of hypotheses with heterogeneous, subjective plausibility. We illustrate implications for equilibrium selection when hypotheses that differ in terms of optimism are selected from a distribution with latent probabilities.

Keywords: Belief Disagreement; Discovery Decision; Latent Probability; Subjective Evidence (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2014-09-02
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:stavef:2014_014

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