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Subjectivity in Inductive Inference

Author

Listed:
  • Itzhak Gilboa

    (TAU - Tel Aviv University)

  • Larry Samuelson

    (Department of Economics - Yale University [New Haven])

Abstract

This paper examines circumstances under which subjectivity enhances the effectiveness of inductive reasoning. We consider a game in which Fate chooses a data generating process and agents are characterized by inference rules that may be purely objective (or data-based) or may incorporate subjective considerations. The basic intuition is that agents who invoke no subjective considerations are doomed to "overfit" the data and therefore engage in ineffective learning. The analysis places no computational or memory limitations on the agents -- the role for subjectivity emerges in the presence of unlimited reasoning powers.
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Suggested Citation

  • Itzhak Gilboa & Larry Samuelson, 2012. "Subjectivity in Inductive Inference," Working Papers hal-00756342, HAL.
    • Handle: RePEc:hal:wpaper:hal-00756342
    as

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    References listed on IDEAS

    as
    1. Gilboa, Itzhak & Schmeidler, David, 2010. "Simplicity and likelihood: An axiomatic approach," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1757-1775, September.
    2. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    3. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
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    Cited by:

    1. Gilboa, Itzhak & Samuelson, Larry & Schmeidler, David, 2013. "Dynamics of inductive inference in a unified framework," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1399-1432.
    2. Gilboa, Itzhak & Samuelson, Larry & Schmeidler, David, 2022. "Learning (to disagree?) in large worlds," Journal of Economic Theory, Elsevier, vol. 199(C).
    3. Gilboa, Itzhak & Schmeidler, David, 2010. "Simplicity and likelihood: An axiomatic approach," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1757-1775, September.
    4. George J. Mailath & Larry Samuelson, 2020. "Learning under Diverse World Views: Model-Based Inference," American Economic Review, American Economic Association, vol. 110(5), pages 1464-1501, May.
    5. Gilboa, Itzhak & Minardi, Stefania & Samuelson, Larry, 2020. "Theories and cases in decisions under uncertainty," Games and Economic Behavior, Elsevier, vol. 123(C), pages 22-40.

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    More about this item

    Keywords

    Subjectivity; Inductive Inference;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C0 - Mathematical and Quantitative Methods - - General

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