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International Journal of Game Theory

, Volume 42, Issue 3, pp 725–753 | Cite as

Awareness-dependent subjective expected utility

  • Burkhard C. SchipperEmail author
Article

Abstract

We develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz et al. (J Econ Theory 130:78–94, 2006; Games Econ Behav 62:304–324, 2008; Unawareness, beliefs, and speculative trade. University of California, Davis, 2011a) as primitives in the Anscombe–Aumann approach to subjective expected utility. We observe that a decision maker is unaware of an event if and only if her choices reveal that the event is “null” and the negation of the event is “null”. Moreover, we characterize “impersonal” expected utility that is behaviorally indistinguishable from awareness-dependent subject expected utility and assigns probability zero to some subsets of states that are not necessarily events. We discuss in what sense probability zero can model unawareness.

Keywords

Unawareness Awareness Unforeseen contingencies Null Probability zero Subjective expected utility Anscombe–Aumann Small worlds 

JEL Classification

C70 C72 D03 D80 D81 

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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CaliforniaDavisUSA

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