A Theory of Subjective Learning

28 Pages Posted: 1 Sep 2012

See all articles by David Dillenberger

David Dillenberger

University of Pennsylvania - Department of Economics

Juan Sebastián Lleras

University of California, Berkeley

Philipp Sadowski

Duke University - Department of Economics

Norio Takeoka

Yokohama National University - Department of Economics

Date Written: August 31, 2012

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 individual’s 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 Blackwell’s (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.

Keywords: Subjective learning, partitional learning, preference for flexibility, resolution of uncertainty, valuing more binary bets, subjective filtration

JEL Classification: D80, D81, D83

Suggested Citation

Dillenberger, David and Lleras, Juan Sebastián and Sadowski, Philipp and Takeoka, Norio, A Theory of Subjective Learning (August 31, 2012). PIER Working Paper No. 12-034; Economic Research Initiatives at Duke (ERID) Working Paper No. 134. Available at SSRN: https://ssrn.com/abstract=2139419 or http://dx.doi.org/10.2139/ssrn.2139419

David Dillenberger (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-1503 (Phone)

Juan Sebastián Lleras

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Philipp Sadowski

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1800 (Phone)

Norio Takeoka

Yokohama National University - Department of Economics ( email )

79-3 Tokiwadai
Yokohama, 240-8501
Japan

HOME PAGE: p://www.takeoka.ynu.ac.jp/

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