Probability and Uncertainty in Economic Modeling
Authors: Gilboa, Itzhak; Postlewaite, Andrew W.; Schmeidler, David
Source: The Journal of Economic Perspectives, Volume 22, Number 3, Summer 2008 , pp. 173-188(16)
Publisher: American Economic Association
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 us characterize situations in which entertaining such beliefs is neither realistic nor necessarily rational.
Document Type: Research Article
Publication date: June 1, 2008
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