Rationalizing dynamic choices
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arXiv
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| Hauptverfasser: | , |
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| Format: | Preprint |
| Veröffentlicht: |
2025
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| _version_ | 1866917979298463744 |
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| author | de Oliveira, Henrique Lamba, Rohit |
| author_facet | de Oliveira, Henrique Lamba, Rohit |
| contents | An analyst observes an agent take a sequence of actions. The analyst does not have access to the agent's information and ponders whether the observed actions could be justified through a rational Bayesian model with a known utility function. We show that the observed actions cannot be justified if and only if there is a single deviation argument that leaves the agent better off, regardless of the information. The result is then extended to allow for distributions over possible action sequences. Four applications are presented: monotonicity of rationalization with risk aversion, a potential rejection of the Bayesian model with observable data, feasible outcomes in dynamic information design, and partial identification of preferences without assumptions on information. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2504_05251 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Rationalizing dynamic choices de Oliveira, Henrique Lamba, Rohit Theoretical Economics Econometrics An analyst observes an agent take a sequence of actions. The analyst does not have access to the agent's information and ponders whether the observed actions could be justified through a rational Bayesian model with a known utility function. We show that the observed actions cannot be justified if and only if there is a single deviation argument that leaves the agent better off, regardless of the information. The result is then extended to allow for distributions over possible action sequences. Four applications are presented: monotonicity of rationalization with risk aversion, a potential rejection of the Bayesian model with observable data, feasible outcomes in dynamic information design, and partial identification of preferences without assumptions on information. |
| title | Rationalizing dynamic choices |
| topic | Theoretical Economics Econometrics |
| url | https://arxiv.org/abs/2504.05251 |