Citation:
Karni, E. . (2007). Bayesian Decision Theory and the Representation of Beliefs. Discussion Papers. presented at the 1. Retrieved from /files/dp444.pdf
Abstract:
In this paper, I present a Bayesian decision theory and define choice-based subjective probabilities that faithfully represent Bayesian decision makers prior and posterior beliefs regarding the likelihood of the possible effects contingent on his actions. I argue that no equivalent results can be obtained in Savage s (1954) subjective expected utility theory and give an example illustrating the potential harm caused by ascribing to a decision maker subjective probabilities that do not represent his beliefs.