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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 2, Number 3 (September 2007) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/10106

Title: Updating preferences with multiple priors
Authors: Eran Hanany; Tel Aviv University
Peter Klibanoff; Northwestern University
Keywords: Updating, dynamic consistency, ambiguity, Ellsberg, Bayesian, consequentialism
D81, D83, D91
Issue Date: 5-Sep-2007
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 2, No 3 (2007)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] We propose and axiomatically characterize dynamically consistent update rules for decision making under ambiguity. These rules apply to the preferences with multiple priors of Gilboa and Schmeidler (1989), and are the first, for any model of preferences over acts, to be able to reconcile typical behavior in the face of ambiguity (as exemplified by Ellsberg.s paradox) with dynamic consistency for all non-null events. Updating takes the form of applying Bayes. rule to subsets of the set of priors, where the specific subset depends on the preferences, the conditioning event, and the choice problem (i.e., a feasible set of acts together with an act chosen from that set).
URI: http://hdl.handle.net/1807/10106
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20070261
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 2, Number 3 (September 2007)

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