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A Theory of Subjective Learning

Author

Listed:
  • David Dillenberger
  • Juan Sebastian Lleras
  • Philipp Sadowski
  • Norio Takeoka

Abstract

We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive two utility representations of preferences over menus of acts that capture the individuals uncertainty about his future beliefs. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of more preference for flexibility via a subjective analogue of Blackwells (1951, 1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. We conclude by extending the basic model to accommodate an individual who expects to learn gradually over time by means of a subjective filtration.

Suggested Citation

  • David Dillenberger & Juan Sebastian Lleras & Philipp Sadowski & Norio Takeoka, 2012. "A Theory of Subjective Learning," Working Papers 12-17, Duke University, Department of Economics.
    • Handle: RePEc:duk:dukeec:12-17
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    Cited by:

    1. David Dillenberger & Philipp Sadowski, 2012. "Generalized Partition and Subjective Filtration," Levine's Working Paper Archive 786969000000000591, David K. Levine.
    2. David Dillenberger & Philipp Sadowski, 2012. "Generalized Partition and Subjective Filtration," PIER Working Paper Archive 12-036, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

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