A Theory of Subjective Learning, Second Version

30 Pages Posted: 20 Mar 2013

See all articles by David Dillenberger

David Dillenberger

University of Pennsylvania - Department of Economics

Juan Sebastian Lleras

Carnegie Mellon University - Department of Social and Decision Sciences

Philipp Sadowski

Duke University - Department of Economics

Norio Takeoka

Yokohama National University - Department of Economics

Date Written: March 18, 2013

Abstract

We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. 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. On the extended domain of dated-menus, we show how 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, dated-menus

JEL Classification: D80, D81, D82

Suggested Citation

Dillenberger, David and Lleras, Juan Sebastian and Sadowski, Philipp and Takeoka, Norio, A Theory of Subjective Learning, Second Version (March 18, 2013). PIER Working Paper No. 13-014. Available at SSRN: https://ssrn.com/abstract=2235043 or http://dx.doi.org/10.2139/ssrn.2235043

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 Sebastian Lleras

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
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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