Learning Under Unawareness
31 Pages Posted: 9 Feb 2018
Date Written: November 27, 2017
We propose a model of learning when experimentation is possible, but unawareness and ambiguity matter. In this model, complete lack of information regarding the underlying data generating process is expressed as a (maximal) family of priors. These priors yield posterior inferences that become more precise as more information becomes available. As information accumulates, however, the decision maker's level of awareness as encoded in the state space may expand. Such newly learned states are initially seen as ambiguous, but as evidence accumulates there is a gradual reduction of ambiguity.
Keywords: learning, unawareness, ambiguity
JEL Classification: D81, D83
Suggested Citation: Suggested Citation