Awareness-Dependent Subjective Expected Utility

No 264, Working Papers from University of California, Davis, Department of Economics

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.

Keywords: unawareness; awareness; unforeseen contingencies; null; probability zero; subjective probability; Anscombe-Aumann; small worlds (search for similar items in EconPapers)
JEL-codes: C70 C72 D03 D80 D81 (search for similar items in EconPapers)
Pages: 27
Date: 2011-12-20
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Awareness-dependent subjective expected utility (2013)
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