A Behavioral Characterization of Plausible Priors

One of the last great novels of José Saramago, Death with Interruptions, begins with an epigraph taken from Ludwig Wittgenstein: “If, for example, you were to think more deeply about death, then it would be truly strange if, in so doing, you did not encounter new images, new linguistic fields”. The aim of my paper is to ponder on what kind of a new language game the Portuguese writer is offering us in his book and how to interpret his investigations from the angle of another contemporary literary and philosophical thanatological discourses.One of the last great novels of José Saramago, Death with Interruptions, begins with an epigraph taken from Ludwig Wittgenstein: “If, for example, you were to think more deeply about death, then it would be truly strange if, in so doing, you did not encounter new images, new linguistic fields”. The aim of my paper is to ponder on what kind of a new language game the Portuguese writer is offering us in his book and how to interpret his investigations from the angle of another contemporary literary and philosophical thanatological discourses

Vector Expected Utility and Attitudes toward Variation

This paper analyzes a model of decision under ambiguity, deemed vector expected utility or VEU. According to the proposed model, an act f, mapping states of nature to prizes, is evaluated via the sum of (1) a baseline expected-utility term, and (2) an ambiguity-adjustment term. The adjustment term may be interpreted as reflecting the variability of the act f around its baseline expected utility; in particular, like classical statistical measures of variability, it is invariant to location and sign changes. A behavioral characterization of the VEU model is provided. Furthermore, an updating rule for VEU preferences is proposed and characterized. The suggested updating rule facilitates the analysis of sophisticated dynamic choice with VEU preferences.ambiguity, reference prior, vector measures

Dynamic Choice Under Ambiguity

This paper analyzes sophisticated dynamic choice for ambiguity-sensitive decision makers. It characterizes Consistent Planning via axioms on preferences over decision trees. Furthermore, it shows how to elicit conditional preferences from prior preferences. The key axiom is a weakening of Dynamic Consistency, deemed Sophistication. The analysis accommodates arbitrary decision models and updating rules. Hence, the results indicate that (i) ambiguity attitudes, (ii) updating rules, and (iii) sophisticated dynamic choice are mutually orthogonal aspects of preferences. As an example, a characterization of prior-by-prior Bayesian updating and Consistent Planning for arbitrary maxmin-expected utility preferences is presented. The resulting sophisticated MEU preferences are then used to analyze the value of information under ambiguity; a basic trade-off between information acquisition and commitment is highlighted.

Dynamic choice under ambiguity

This paper analyzes dynamic choice for ambiguity-sensitive decision makers. It demonstrates that unambiguous behavioral predictions can be obtained, even in the face of dynamic inconsistency, by taking the individual's preferences over decision trees, rather than acts, as primitive. In particular, it leverages preferences over trees to formalize Sophistication as an assumption about the way individuals resolve conflicts between preferences at different decision points. The main result employs Sophistication to provide a behavioral characterization of Consistent Planning (Strotz, 1956). The analysis accommodates arbitrary decision models and updating rules, and delivers unambiguous welfare comparisons. As an example, a characterization of prior-by-prior Bayesian updating and Consistent Planning for arbitrary maxmin-expected utility preferences is presented. The resulting sophisticated MEU preferences are then used to analyze the value of information under ambiguity; a basic trade-off between information acquisition and commitment is highlighted.Ambiguity, consistent planning, value of information

An Epistemic Characterisation of Extensive Form Rationalisability

We use an extensive form, universal type space to provide the following epistemic characterisation of extensive form rationalisability. Say that player i strongly believes event E if i is certain of E conditional on each of her information sets consistent with E. Our main contribution is to show that a strategy profile s is extensive form rationalisable if and only if there is a state in which s is played and (0) everybody is rational, (1) everybody strongly believes (0), (2) everybody strongly believes (0) & (1), (3) everybody strongly believes (0) & (1) & (2), .... This result also allows us to provide sufficient epistemic conditions for the backward induction outcome and to relate extensive form rationalisability and conditional common certainty of rationality.Rationalisability, Extensive Form Games

Parental Guidance and Supervised Learning

We propose a simple theoretical model of supervised learning that is potentially useful to interpret a number of empirical phenomena. The model captures a basic tradeoff between sheltering the child from the consequences of his mistakes, and allowing him to learn from experience. We characterize the optimal parenting policy and its comparative-statics properties. We then show that key features of the optimal policy can be useful to interpret provocative findings from behavioral genetics.

A more robust definition of multiple priors

This paper provides a multiple-priors representation of ambiguous beliefs à la Ghirardato, Maccheroni, and Marinacci (2004) and Nehring (2002) for any preference that is (i) monotonic, (ii) Bernoullian, i.e. admits an affine utility representation when restricted to constant acts, and (iii) suitably continuous. Monotonicity is the main substantive assumption: we do not require either Certainty Independence or Uncertainty Aversion. We characterize the set of ambiguous beliefs in terms of Clarke-Rockafellar differentials. This allows us to provide an explicit calculation of the set of priors for several recent decision models: multiplier preferences, the smooth ambiguity model, the vector expected utility model, as well as confidence function, variational, general "uncertainty-averse" preferences, and mean-dispersion preferences.Multiple Priors; Upper and Lower Probabilities; Ambiguity; Monotonic Preferences

CASES OF TERRITORIAL ‘MICRO-BOUNDARIES’ IN “DESTRA SELE” THROUGH SIX ANCIENT MAPS (SECC. XVIII-XIX)

L’analisi di sei carte storiche dei secoli XVIII-XIX, raffiguranti l’area oggi definita di “Destra Sele” e volte a delimitare i confini di varie proprietà, evidenzia gli elementi di coevi conflitti territoriali, dovuti a due cause fondamentali: la prima riguarda i frequenti scontri tra gli antichi diritti feudali, rivendicati dalla famiglia Doria D’Angri, e le richieste avanzate dalla vicina Università (= comune) di Eboli per l’esercizio degli usi civici; la seconda è legata all’uso delle acque, giacché nella Piana del Sele, nei secoli scorsi, era molto diffusa l’abitudine di deviare arbitrariamente il corso dei fiumi a scopo irriguo, senza che vi fossero alla base di tali interventi dei piani organici e coerenti, né tanto meno risolutivi della condizione di impaludamento dei territori circostanti. A tale situazione avrebbe cercato di porre rimedio l’intervento del governo napoleonico, proseguito da quello dei Borboni, dopo la Restaurazione. La soluzione definitiva si sarebbe però raggiunta soltanto con la bonifica integrale fascista (avvenuta negli anni ‘30 del Novecento) e l’istituzione dei relativi consorzi in Destra e Sinistra del fiume Sele: sorti per porre su basi concrete gli elementi di organizzazione e controllo dell’economia territoriale legati alla bonifica, sono tuttora impegnati nella difesa del suolo, nell’irrigazione, nella tutela dell’ambiente e nella valorizzazione del territorio agricolo della piana. Le sei carte, comparate con cartografia attuale attraverso l’impiego dei G.I.S., rendono quindi evidenti i profondi mutamenti oggi subentrati nell’area indagata, tra cui emergono i segni dell’opera di bonifica e della successiva Riforma Agraria, la fine dei problemi di giustizia distributiva delle acque, l’elevata densità abitativa e la presenza di numerose attività industriali e terziarie, con particolare rilevanza del turismo.The analysis of six historical maps of the XVIII-XIX centuries, describing the area now known as “Destra Sele” and delimiting some property boundaries, highlights the elements of contemporary territorial conflicts, caused by two fundamental causes: the first pertains to frequent clashes between the ancient ‘feudal rights’, claimed by the Doria D’Angri family, and the requests from the nearby Eboli’s University (= Commune) for civic uses; the second is related to the use of water: infact, in the past, landowners of the Piana del Sele, usually, diverted the rivers for irrigation, without organic and consistent plans and without solving the serious waterlogging of nearby areas. The Napoleonic Government and, after post Revolutionary, the Bourbon Government intervened to resolve this problem. Only the Fascist Government, however, in the ‘30s of XX century, finally solved it, with the total drainage of the marshes and the subsequent establishment of the Land Reclamation Authorities, on the Right and on the Left of Sele River. These Authorities, specifically created to establish the organization and control of the territorial economy post Reclamation, are still engaged in soil conservation, irrigation, environmental protection and enhancement of agricultural land of the Sele’s Plain. So, the six maps, compared with existing maps, through the G.I.S., make the profound changes of this territory clear, including the signs of Fascist Reclamation and of the following Agriculture Reform, the end of the problem of distribution of the water, the high population density and the presence of a lot of industries and tertiary activities (particularly in tourism)

Efficient Sorting in a Dynamic Adverse Selection Model: The Hot Potato

We study the possibility of achieving efficiency in a dynamic adverse selection market for durable goods. The idea is to use the number of times a car has been traded (``vintage'') as a signal of its quality. Higher-valuation consumers experiment with younger vintages. We first exhibit an impossibility result: no choice of (re)sale prices can induce consumers to follow this experimentation policy. We then show that modified leasing contracts can be constructed so as to achieve efficiency if consumers are patient.