Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150099
Authors: 
Klibanoff, Peter
Hanany, Eran
Year of Publication: 
2007
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 2 [Year:] 2007 [Issue:] 3 [Pages:] 261-298
Abstract: 
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).
Subjects: 
Updating
dynamic consistency
ambiguity
Ellsberg
Bayesian
consequentialism
JEL: 
D81
D83
D91
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/2.5
Document Type: 
Article

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