Second-Order Induction and Agreement

48 Pages Posted: 28 Jul 2017 Last revised: 29 Aug 2017

See all articles by Rossella Argenziano

Rossella Argenziano

University of Essex - Department of Economics

Itzhak Gilboa

Tel Aviv University - Eitan Berglas School of Economics; HEC Paris - Economics & Decision Sciences

Date Written: July 1, 2017

Abstract

Agents make predictions based on similar past cases. The notion of similarity is itself learnt from experience by "second-order induction": past cases inform agents also about the relative importance of various attributes in judging similarity. However, there may be multiple "optimal" similarity functions for explaining past data. Moreover, the computation of the optimal similarity function is NP-Hard. We offer conditions under which rational agents who have access to the same observations are likely to converge on the same predictions, and conditions under which they may entertain different probabilistic beliefs.

Suggested Citation

Argenziano, Rossella and Gilboa, Itzhak, Second-Order Induction and Agreement (July 1, 2017). HEC Paris Research Paper No. ECO/SCD-2017-1221. Available at SSRN: https://ssrn.com/abstract=3009169 or http://dx.doi.org/10.2139/ssrn.3009169

Rossella Argenziano

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Itzhak Gilboa (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
972-3-640-6423 (Phone)
972-3-640-9908 (Fax)

HEC Paris - Economics & Decision Sciences

Paris
France

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