American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
"Reverse Bayesianism": A Choice-Based Theory of Growing Awareness
American Economic Review
vol. 103,
no. 7, December 2013
(pp. 2790–2810)
Abstract
This article introduces a new approach to modeling the expanding universe of decision makers in the wake of growing awareness, and invokes the axiomatic approach to model the evolution of decision makers' beliefs as awareness grows. The expanding universe is accompanied by extension of the set of acts, the preference relations over which are linked by a new axiom, invariant risk preferences, asserting that the ranking of lotteries is independent of the set of acts under consideration. The main results are representation theorems and rules for updating beliefs over expanding state spaces and events that have the flavor of "reverse Bayesianism."Citation
Karni, Edi, and Marie-Louise Vierø. 2013. ""Reverse Bayesianism": A Choice-Based Theory of Growing Awareness." American Economic Review, 103 (7): 2790–2810. DOI: 10.1257/aer.103.7.2790Additional Materials
JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D83 Search; Learning; Information and Knowledge; Communication; Belief