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SSRN Electronic Journal
Article . 2024 . Peer-reviewed
Data sources: Crossref
https://dx.doi.org/10.48550/ar...
Article . 2024
License: arXiv Non-Exclusive Distribution
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EconStor
Research . 2024
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Predicting the Unpredictable under Subjective Expected Utility

Authors: Schipper, Burkhard;

Predicting the Unpredictable under Subjective Expected Utility

Abstract

We consider a decision maker who is unaware of objects to be sampled and thus cannot form beliefs about the occurrence of particular objects. Ex ante she can form beliefs about the occurrence of novelty and the frequencies of yet to be known objects. Conditional on any sampled objects, she can also form beliefs about the next object being novel or being one of the previously sampled objects. We characterize behaviorally such beliefs under subjective expected utility. In doing so, we relate "reverse" Bayesianism, a central property in the literature on decision making under growing awareness, with exchangeable random partitions, the central property in the literature on the discovery of species problem and mutations in statistics, combinatorial probability theory, and population genetics. Partition exchangeable beliefs do not necessarily satisfy "reverse" Bayesianism. Yet, the most prominent models of exchangeable random partitions, the model by De Morgan (1838), the one parameter model of Ewens (1972), and the two parameter model of Pitman (1995) and Zabell (1997), do satisfy "reverse" Bayesianism. Our characterization allows us to interpret these models as subjective beliefs of a decision maker and to derive the parameters from choice behavior.

35 pages, 4 figures

Related Organizations
Keywords

unknown unknowns, ddc:330, Probability (math.PR), "reverse" Bayesianism, Awareness of unawareness, exchangeable random partitions, novelty, FOS: Economics and business, D83, 60G09, inductive reasoning, Economics - Theoretical Economics, FOS: Mathematics, Theoretical Economics (econ.TH), discovery of species problem, discovery, Mathematics - Probability

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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