Ambiguity and Partial Bayesian Updating
Theoretical Economics
2023-03-21 v3
Abstract
Models of updating a set of priors either do not allow a decision maker to make inference about her priors (full bayesian updating or FB) or require an extreme degree of selection (maximum likelihood updating or ML). I characterize a general method for updating a set of priors, partial bayesian updating (PB), in which the decision maker (i) utilizes an event-dependent threshold to determine whether a prior is likely enough, conditional on observed information, and then (ii) applies Bayes' rule to the sufficiently likely priors. I show that PB nests FB and ML and explore its behavioral properties.
Cite
@article{arxiv.2102.11429,
title = {Ambiguity and Partial Bayesian Updating},
author = {Matthew Kovach},
journal= {arXiv preprint arXiv:2102.11429},
year = {2023}
}