Related papers: Subjective Expected Utility and Psychological Gamb…
We investigate how individuals form expectations about population behavior using statistical inference based on observations of their social relations. Misperceptions about others' connectedness and behavior arise from sampling bias…
Assuming that agents' preferences satisfy first-order stochastic dominance, we show how the Expected Utility paradigm can rationalize all optimal investment choices: the optimal investment strategy in any behavioral law-invariant…
People often deviate from expected utility theory when making risky and intertemporal choices. While the effects of probabilistic risk and time delay have been extensively studied in isolation, their interplay and underlying theoretical…
We show that the main results of the expected utility and dual utility theories can be derived in a unified way from two fundamental mathematical ideas: the separation principle of convex analysis, and integral representations of continuous…
We relate the strategy sets that a player ends up with after refining his own strategies according to two very different models of rationality: namely, utility maximization and regret minimization.
A dynamic model of collective consumption and saving decisions made by a finite number of agents with constant but different discount rates is developed. Collective utility is a weighted sum of individual utilities with time-varying utility…
We present a rational analysis of curiosity, proposing that people's curiosity is driven by seeking stimuli that maximize their ability to make appropriate responses in the future. This perspective offers a way to unify previous theories of…
Inspired by the theory of desirable gambles that is used to model uncertainty in the field of imprecise probabilities, I present a theory of desirable things. Its aim is to model a subject's beliefs about which things are desirable. What…
This paper presents a plausible reasoning system to illustrate some broad issues in knowledge representation: dualities between different reasoning forms, the difficulty of unifying complementary reasoning styles, and the approximate nature…
This paper studies n-player games where players beliefs about their opponents behaviour are capacities. The concept of an equilibrium under uncertainty was introduced J.Dow and S.Werlang (J Econ. Theory 64 (1994) 205--224) for two players…
Coherent sets of almost desirable gambles and credal sets are known to be equivalent models. That is, there exists a bijection between the two collections of sets preserving the usual operations, e.g. conditioning. Such a correspondence is…
English speakers use probabilistic phrases such as likely to communicate information about the probability or likelihood of events. Communication is successful to the extent that the listener grasps what the speaker means to convey and, if…
We propose an easily computed estimator of marginal likelihoods from posterior simulation output, via reciprocal importance sampling, combining earlier proposals of DiCiccio et al (1997) and Robert and Wraith (2009). This involves only the…
We study how individuals trade off outcome ("what") and process ("how") utility in high-stakes strategic decisions, namely professional tennis. Using optimality conditions and the second-service rule, we derive a sufficient condition for…
We consider how an agent should update her uncertainty when it is represented by a set P of probability distributions and the agent observes that a random variable X takes on value x, given that the agent makes decisions using the minimax…
In coordination games and speculative over-the-counter financial markets, solutions depend on higher-order average expectations: agents' expectations about what counterparties, on average, expect their counterparties to think, etc. We offer…
Agents often have individual goals which depend on a group's actions. If agents trust a forecast of collective action and adapt strategically, such prediction can influence outcomes non-trivially, resulting in a form of performative…
Many policies allocate harms or benefits that are uncertain in nature: they produce distributions over the population in which individuals have different probabilities of incurring harm or benefit. Comparing different policies thus involves…
In the large financial market, which is described by a model with countably many traded assets, we formulate the problem of the expected utility maximization. Assuming that the preferences of an economic agent are modeled with a stochastic…
We study a modified version of the Naming Game, a recently introduced model which describes how shared vocabulary can emerge spontaneously in a population without any central control. In particular, we introduce a new mechanism that allows…