Working Papers
By Year:
Paper #  Author  Title  

16011 
David Dillenberger R. Vijay Krishna Philipp Sadowski 
Subjective Dynamics Information Constraints  
We axiomatize a new class of recursive dynamic models that capture subjective constraints on the amount of information a decision maker can obtain, pay attention to, or absorb, via a Markov Decision Process for Information Choice (MIC). An MIC is a subjective decision process that specifies what type of information about the payoffrelevant state is feasible in the current period, and how the choice of what to learn now affects what can be learned in the future. The constraint imposed by the MIC is identified from choice behavior up to a recursive extension of Blackwell dominance. All the other parameters of the model, namely the anticipated evolution of the payoffrelevant state, state dependent consumption utilities, and the discount factor are also uniquely identified. Download Paper


13067 
David Dillenberger Juan Sebastian Lleras Philipp Sadowski Norio Takeoka 
"A Theory of Subjective Learning", Third Version  
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. One representation uniquely identifies information as a probability measure over posteriors and the other identifies information as a partition of the state space. We compare individuals who expect to learn differently in terms of their preference for flexibility. On the extended domain of datedmenus, we show how to accommodate gradual learning over time by means of a subjective filtration. Download Paper


13014 
David Dillenberger Juan Sebastian Lleras Philipp Sadowski Norio Takeoka 
“A Theory of Subjective Learning, Second Version”  
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of ”more preference for flexibility” via a subjective analogue of Blackwell’s (1951, 1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. On the extended domain of datedmenus, we show how to accommodate an individual who expects to learn gradually over time by means of a subjective filtration. Download Paper


12036 
David Dillenberger Philipp Sadowski 
"Generalized Partition and Subjective Filtration"  
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst, and hence should be identified from observed choice data. An information structure is objectively describable if signals correspond to events of the objective state space. We derive a representation of preferences over menus of acts that captures the behavior of a Bayesian decision maker who expects to receive such signals. The class of information structures that can support such a representation generalizes the notion of a partition of the state space. The representation allows us to compare individuals in terms of the preciseness of their information structures without requiring that they share the same prior beliefs. We apply the model to study an individual who anticipates gradual resolution of uncertainty over time. Both the filtration (the timing of information arrival with the sequence of partitions it induces) and prior beliefs are uniquely identified. Download Paper


12034 
David Dillenberger Philipp Sadowski Juan Sebastian Lleras Norio Takeoka 
"A Theory of Subjective Learning"  
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive two utility representations of preferences over menus of acts that capture the individual’s uncertainty about his future beliefs. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of “more preference for flexibility” via a subjective analogue of Blackwell’s (1951, 1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. We conclude by extending the basic model to accommodate an individual who expects to learn gradually over time by means of a subjective filtration. Download Paper


12007 
David Dillenberger Philipp Sadowski 
"Subjective Learning", Second Version  
We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive a sequence of representations of preferences over menus of acts that capture the individual's uncertainty about his future beliefs. Using the most general representation, we characterize a notion of "more preference for flexibility" via a subjective analogue of Blackwell's (1951, 1953) comparisons of experiments. A more refined representation allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. The class of information structures that can support such a representation generalizes the notion of a partition of the state space. We apply the model to study an individual who anticipates gradual resolution of uncertainty over time. Both the filtration (the timing of information arrival with the sequence of partitions it induces) and prior beliefs are uniquely identified. Download Paper


11042 
David Dillenberger Philipp Sadowski 
"Models of Subjective Learning"  
We study a decision maker who faces a dynamic decision problem in which the process of information arrival is subjective. By studying preferences over menus of acts, we derive a sequence of utility representations that captures the decision maker’s uncertainty about the beliefs he will hold when choosing from a menu. In the most general model of secondorder beliefs, we characterize a notion of "more preference for flexibility" via a subjective analogue of Blackwell’s (1951, 1953) comparisons of experiments. We proceed to analyze a model in which signals are subsets of the state space. The corresponding representation enables us to compare the behavior of two decision makers who expect to learn differently, even if they do not agree on their prior beliefs. The class of information systems that can support such a representation generalizes the notion of modeling information as a partition of the state space. We apply the model to study a decision maker who anticipates subjective uncertainty to be resolved gradually over time. We derive a representation that uniquely identifies both the filtration, which is the timing of information arrival with the sequence of partitions it induces, and the decision maker’s prior beliefs. Download Paper


09014 
David Dillenberger Philipp Sadowski 
"Ashamed to be Selfish", Second Version  
We study a twostage choice problem. In the first stage, the decision maker (DM) chooses a set of payoffallocations between herself and a passive recipient. In the second stage, DM chooses an allocation from the set. The recipient is only aware of the second stage choice. Choosing selfishly in the second stage, in the face of a fairer available alternative, may inflict shame on DM. We axiomatize a representation of DM's preferences over sets that identifies DM's selfish ranking, her norm of fairness and shame. It has been suggested that altruism is a prominent motive for nonselfish choice. We identify a condition under which shame to be selfish can mimic altruism, when the experimenter only records the second stage choice. An additional condition implies that the norm of fairness can be characterized as the Nash solution of a bargaining game induced by the secondstage choice problem. The representation is applied to a simple strategic situation, a game of trust. Download Paper


08037 
David Dillenberger Philipp Sadowski 
"Ashamed to be Selfish"  
We study a twostage choice problem, where alternatives are allocations between the decision maker (DM) and a passive recipient. The recipient observes choice behavior in stage two, while stage one choice is unobserved. Choosing selfishly in stage two, in the face of a fairer available alternative, may inflict shame on DM. DM has preferences over sets of alternatives that represent period two choices. We axiomatize a representation that identifies DM's selfish ranking, her norm of fairness and shame. Altruism is the most prominent motive that can explain nonselfish choice. We identify a condition under which shame to be selfish can mimic altruism, when only stagetwo choice is observed by the experimenter. An additional condition implies that the norm of fairness can be characterized as the Nash solution of a bargaining game induced by the secondstage choice problem. The representation is generalized to allow for finitely many recipients and applied to a simple strategic situation, a game of trust. Download Paper
