Template-Type: ReDIF-Paper 1.0
Author-Name: Burkhard Schipper
Author-Name-First: Burkhard
Author-Name-Last: Schipper
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Awareness-Dependent Subjective Expected Utility
Abstract: We develop awareness-dependent subjective expected utility by taking unawareness structures introduced in Heifetz, Meier, and Schipper (2006, 2008, 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.
Length: 27
File-URL: https://repec.dss.ucdavis.edu/files/kmQhVwr8HCw4JYbQih1i5Lq7/10-22.pdf
File-Format: application/pdf
Number: 264
Classification-JEL: C70, C72, D03, D80, D81
KeyWords: unawareness, awareness, unforeseen contingencies, null, probability zero, subjective probability, Anscombe-Aumann, small worlds
Creation-Date: 20111220
Handle: RePEc:cda:wpaper:264