Zinn, Jesse (2013): Modelling Biased Judgement with Weighted Updating.
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Abstract
The weighted updating model is a generalization of Bayesian updating that allows for biased beliefs by weighting the constituent functions of Bayes' rule with real exponents. In this paper I show that transforming a distribution by exponential weighting and normalization systematically affects the information entropy of the resulting distribution. Specifically, if the weight is greater then one then the resulting distribution has less information entropy than the original distribution (and vice versa). This result provides a useful interpretation of the model, since, for example a likelihood function with greater entropy translates to the associated data being treated with less information content. The result also justifies using the model as it has been used in the literature, i.e. to model biases in which individuals treat observations as being either more or less informative than they should.
Item Type:  MPRA Paper 

Original Title:  Modelling Biased Judgement with Weighted Updating 
Language:  English 
Keywords:  Bayesian Updating, Cognative Biases, Learning, Uncertainty, Information Entropy 
Subjects:  C  Mathematical and Quantitative Methods > C0  General > C02  Mathematical Methods D  Microeconomics > D0  General > D03  Behavioral Microeconomics: Underlying Principles 
Item ID:  61403 
Depositing User:  Jesse Zinn 
Date Deposited:  17 Jan 2015 06:06 
Last Modified:  26 Sep 2019 12:00 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/61403 
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Modelling Biased Judgement with Weighted Updating. (deposited 01 Oct 2013 12:26)
 Modelling Biased Judgement with Weighted Updating. (deposited 17 Jan 2015 06:06) [Currently Displayed]