Testable Implications of Subjective Expected Utility Theory
Posted: 22 Jun 2006
I show that the predictive content of the hypothesis of subjective expected utility maximization critically depends on what the analyst knows about the details of the problem a particular decision maker faces. When the analyst does not know anything about the agent´s payoffs or beliefs and can only observe the sequence of actions taken by the decision maker any arbitrary sequence of actions can be implemented as the choice of an agent that solves some intertemporal utility maximization problem under uncertainty.
Keywords: Intertemporal decision theory under uncertainty, Testable implications, Savage-Bayesian rationality
JEL Classification: D81, D83
Suggested Citation: Suggested Citation