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Probabilities in Economic Modeling

Author

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  • Itzhak Gilboa
  • Andrew Postlewaite
  • David Schmeidler

Abstract

Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question. We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling. Models of belief formation may enhance our understanding of the probabilistic beliefs when these exist, and may also help up characterize situations in which entertaining such beliefs is neither realistic nor necessarily rational.
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Suggested Citation

  • Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2007. "Probabilities in Economic Modeling," Levine's Bibliography 843644000000000357, UCLA Department of Economics.
    • Handle: RePEc:cla:levrem:843644000000000357
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    File URL: http://www.tau.ac.il/~igilboa/pdf/GPS_Probabilities_in_Economics.pdf
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    References listed on IDEAS

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    1. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
    2. Enriqueta Aragones & Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2012. "Fact-Free Learning," World Scientific Book Chapters, in: Case-Based Predictions An Axiomatic Approach to Prediction, Classification and Statistical Learning, chapter 8, pages 185-210, World Scientific Publishing Co. Pte. Ltd..
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    5. Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2004. "Rationality of Belief. Or: Why Bayesianism is Neither Necessary nor Sufficient for Rationality," Cowles Foundation Discussion Papers 1484, Cowles Foundation for Research in Economics, Yale University.
    6. Karni, Edi, 1996. "Probabilities and Beliefs," Journal of Risk and Uncertainty, Springer, vol. 13(3), pages 249-262, November.
    7. Antoine Billot & Itzhak Gilboa & Dov Samet & David Schmeidler, 2012. "Probabilities as Similarity-Weighted Frequencies," World Scientific Book Chapters, in: Case-Based Predictions An Axiomatic Approach to Prediction, Classification and Statistical Learning, chapter 7, pages 169-184, World Scientific Publishing Co. Pte. Ltd..
    8. Schmeidler, David, 1989. "Subjective Probability and Expected Utility without Additivity," Econometrica, Econometric Society, vol. 57(3), pages 571-587, May.
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    16. Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2004. "Rationality of Belief Or: Why Savage's axioms are neither necessary nor sufficient for rationality, Second Version," PIER Working Paper Archive 07-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Jan 2007.
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    Citations

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    Cited by:

    1. Itzhak Gilboa, 2010. "Questions in Decision Theory," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 1-19, September.
    2. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS
    3. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS
    4. Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010. "Does consistency predict accuracy of beliefs?: Economists surveyed about PSA," MPRA Paper 26590, University Library of Munich, Germany.
    5. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS
    6. Oxoby, Robert J., 2014. "Social inference and occupational choice: Type-based beliefs in a Bayesian model of class formation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 51(C), pages 30-37.
    7. Patra, Sudip, 2019. "A quantum framework for economic science: New directions," Economics Discussion Papers 2019-20, Kiel Institute for the World Economy (IfW Kiel).
    8. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS

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    More about this item

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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