Probability and Uncertainty in Economic Modeling, Second Version

Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question.  We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling.  Models of belief formation may enhance our understanding of the probabilistic beliefs when these exist, and may also help up characterize situations in which entertaining such beliefs is neither realistic nor necessarily rational.

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Paper Number
08-002
Year
2008