An incomplete ignorance state in repeated-play decision making: A note on Bayesian decision-theoretical framework

Kobayashi, Yohei and Fujikawa, Takemi (2010): An incomplete ignorance state in repeated-play decision making: A note on Bayesian decision-theoretical framework.

Abstract

There has been much reported on decisions from experience, also referred to as decisions in a complete ignorance fashion. This note lays out a Bayesian decision-theoretical framework that provides a computable account for decisions from experience. To make the framework more tractable, this note sets up and examines decisions in a incomplete ignorance fashion. The current discussion asserts that well-known behavioural effects, such as the hot stove effect, and the Bayesian framework may lead to different predictions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bayesian updating; complete ignorance; decisions from experience; incomplete ignorance
• Subjects: D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C11 - Bayesian Analysis: General

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