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A theory of Bayesian decision making with action-dependent subjective probabilities

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Abstract

This paper presents a complete, choice-based, axiomatic Bayesian decision theory. It introduces a new choice set consisting of information-contingent plans for choosing actions and bets and subjective expected utility model with effect-dependent utility functions and action-dependent subjective probabilities which, in conjunction with the updating of the probabilities using Bayes’ rule, gives rise to a unique prior and a set of action-dependent posterior probabilities representing the decision maker’s prior and posterior beliefs.

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  1. Department of Economics, Johns Hopkins University, Baltimore, MD, 21218, USA

    Edi Karni

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  1. Edi Karni
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Correspondence to Edi Karni.

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Karni, E. A theory of Bayesian decision making with action-dependent subjective probabilities. Econ Theory 48, 125–146 (2011). https://doi.org/10.1007/s00199-010-0542-1

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  • DOI: https://doi.org/10.1007/s00199-010-0542-1

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