Stable behavior and generalized partition

Journal Article (Journal Article)

Behavior is stable if the ex ante ranking of two acts that differ only on some event I coincides with their ex post ranking upon learning I. We identify the largest class of information structures for which the behavior of a Bayesian expected utility maximizer is stable. We call them generalized partitions and characterize the learning processes they can accommodate. Often, the information structure is not explicitly part of the primitives in the model, and so becomes a subjective parameter. We propose a way to identify how the individual plans to choose contingent on learning an event, and establish that for a Bayesian expected utility maximizer, stable behavior—formulated in terms of this indirectly observed contingent ranking—is a tight characterization of subjective learning via a generalized partition.

Full Text

Duke Authors

Cited Authors

  • Dillenberger, D; Sadowski, P

Published Date

  • September 1, 2019

Published In

Volume / Issue

  • 68 / 2

Start / End Page

  • 285 - 302

Electronic International Standard Serial Number (EISSN)

  • 1432-0479

International Standard Serial Number (ISSN)

  • 0938-2259

Digital Object Identifier (DOI)

  • 10.1007/s00199-018-1122-z

Citation Source

  • Scopus