Bayesian Analysis and Uncertainty in Economic Theory

✍ Scribed by Richard M. Cyert, Morris H. DeGroot (auth.)

• Publisher: Springer Netherlands
• Year: 1987
• Tongue: English
• Leaves: 216
• Edition: 1
• Category: Library

✦ Synopsis

We began this research with the objective of applying Bayesian methods of analysis to various aspects of economic theory. We were attracted to the Bayesian approach because it seemed the best analytic framework available for dealing with decision making under uncertainty, and the research presented in this book has only served to strengthen our belief in the appropriateness and usefulness of this methodology. More specif­ ically, we believe that the concept of organizational learning is funda­ mental to decision making under uncertainty in economics and that the Bayesian framework is the most appropriate for developing that concept. The central and unifying theme of this book is decision making under uncertainty in microeconomic theory. Our fundamental aim is to explore the ways in which firms and households make decisions and to develop models that have a strong empirical connection. Thus, we have attempted to contribute to economic theory by formalizing models of the actual pro­ cess of decision making under uncertainty. Bayesian methodology pro­ vides the appropriate vehicle for this formalization.

✦ Table of Contents

Front Matter....Pages i-xiv
Introduction....Pages 1-6
Bayesian Decision Theory....Pages 7-26
Behavioral and Control Theory of the Firm....Pages 27-40
Bayesian Analysis and Duopoly Theory....Pages 41-56
Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem....Pages 57-73
Cooperation and Learning in a Duopoly Context....Pages 74-92
Interfirm Learning and the Kinked Demand Curve....Pages 93-108
Sequential Strategies in Dual Control Problems....Pages 109-126
Adaptive Utility....Pages 127-143
Some Examples of Adaptive Utility....Pages 144-151
Sequential Investment Decisions....Pages 152-161
Capital Allocation within Firms....Pages 162-170
Rational Expectations....Pages 171-185
Epilogue....Pages 186-188
Back Matter....Pages 189-206

✦ Subjects

Economic Theory; Science, general