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Reverse Bayesianism and Act Independence

Author

Listed:
  • Surajeet Chakravarty

    (University of Exeter)

  • David Kelsey

    (Nottingham University Business School)

  • Joshua C. Teitelbaum

    (Georgetown University)

Abstract

Karni and Viero (2013) propose a model of belief revision under growing awareness— - reverse Bayesianism - which posits that as a person becomes aware of new acts, consequences, or act-consequence links, she revises her beliefs over an expanded state space in a way that preserves the relative likelihoods of events in the original state space. A key feature of the model is that reverse Bayesianism does not fully determine the revised probability distribution. We provide an assumption— - act independence - that imposes additional restrictions on reverse Bayesian belief revision. We show that with act independence knowledge of the probabilities of the new act events in the expanded state space is sufficient to fully determine the revised probability distribution in each case of growing awareness. We also explore what additional knowledge is required for reverse Bayesianism to pin down the revised probabilities without act independence.

Suggested Citation

  • Surajeet Chakravarty & David Kelsey & Joshua C. Teitelbaum, 2022. "Reverse Bayesianism and Act Independence," Discussion Papers 2022-06, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    • Handle: RePEc:not:notcdx:2022-06
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    References listed on IDEAS

    as
    1. Christopher P. Chambers & Takashi Hayashi, 2018. "Reverse Bayesianism: A Comment," American Economic Journal: Microeconomics, American Economic Association, vol. 10(1), pages 315-324, February.
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    3. Karni Edi & Valenzuela-Stookey Quitzé & Vierø Marie-Louise, 2021. "Reverse Bayesianism: A Generalization," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 21(2), pages 557-569, June.
    4. Karni, Edi & Vierø, Marie-Louise, 2017. "Awareness of unawareness: A theory of decision making in the face of ignorance," Journal of Economic Theory, Elsevier, vol. 168(C), pages 301-328.
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    11. Burkhard Schipper, 2014. "Unawareness - A Gentle Introduction to both the Literature and the Special Issue," Working Papers 153, University of California, Davis, Department of Economics.
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    Cited by:

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    More about this item

    Keywords

    Keywords: act independence; reverse Bayesianism; unawareness;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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