Working Papers, University of California, Department of Economics 10,22
We develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz, Meier, and Schipper (2006, 2008, 2011a) as primitives in the Anscombe-Aumann approach to subjective expected utility. We observe that a decision maker is unaware of an event if and only if her choices reveal that the event is null and the negation of the event is null. Moreover, we characterize impersonal expected utility that is behaviorally indistinguishable from awareness-dependent subject expected utility and assigns probability zero to some subsets of states that are not necessarily events. We discuss in what sense probability zero can model unawareness.
unawareness awareness unforeseen contingencies null probability zero subjective expected utility Anscombe-Aumann small worlds