Bayesian learning and expectations formation: Anything goes

Arbeitspapier

The paper proves that the Bayesian approach to learning and expectations formation implies no propositions that could conceivably be refuted by observation. For a (non-expanding) universe infinite in time but finite at any point of time, it is shown that by a suitable choice of priors, any betting strategy can be rationalized. Consequently, no sequence of future choices can be excluded on the basis of a decision maker's v. Neumann-Morgenstern utility function, her knowledge of past observations, and the assumption of Bayesian rationality. Since no betting strategy is irrational, Bayesianism is useless as a normative theory as well.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeiträge - Serie I ; No. 284

Classification and Topics

• Classification: Wirtschaft ; Economic Methodology ; Bayesian Analysis: General ; Criteria for Decision-Making under Risk and Uncertainty ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Expectations; Speculations
• Subject: Bayesianism ; Bayesian learning ; decision theory ; expectations ; learning ; rational expectations ; rationality ; rationalizability ; subjectively expected utility theory ; subjective probability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Albert, Max
• Event: Veröffentlichung
• (who): Universität Konstanz, Fakultät für Wirtschaftswissenschaften und Statistik
• (where): Konstanz
• (when): 1996

Further information

• Handle: http://hdl.handle.net/10419/68915
• Last update: 10.03.2025, 11:43 AM CET