Probability and Uncertainty in Economic Modeling, Second Version
21 Pages Posted: 28 Jan 2008
Date Written: January 28, 2008
Abstract
Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question. We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling. Models of belief formation may enhance our understanding of the probabilistic beliefs when these exist, and may also help up characterize situations in which entertaining such beliefs is neither realistic nor necessarily rational.
Keywords: Decision making, Bayesian, Behavioral Economics
JEL Classification: B4, D8
Suggested Citation: Suggested Citation
Gilboa, Itzhak and Postlewaite, Andrew and Schmeidler, David, Probability and Uncertainty in Economic Modeling, Second Version (January 28, 2008). PIER Working Paper No. 08-002, Available at SSRN: https://ssrn.com/abstract=1088122 or http://dx.doi.org/10.2139/ssrn.1088122
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