Alternatives to Bayesian Updating

Research output: Contribution to journalReview articlepeer-review

1 Scopus citations

Abstract

We discuss models of updating that depart from Bayes’ rule even when it is well-defined. After reviewing Bayes’ rule and its foundations, we begin our analysis with models of non-Bayesian behavior arising from a bias, a pull toward suboptimal behavior due to a heuristic or a mistake. Next, we explore deviations caused by individuals questioning the prior probabilities they initially used. We then consider non-Bayesian behavior resulting from the optimal response to constraints on perception, cognition, or memory, as well as models based on motivated beliefs or distance minimization. Finally, we briefly discuss models of updating after zero probability events.

Original languageEnglish (US)
Pages (from-to)545-570
Number of pages26
JournalAnnual Review of Economics
Volume16
Issue number1
DOIs
StatePublished - Aug 22 2024
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • base-rate neglect
  • Bayes’ rule
  • cognitive noise
  • conservatism
  • hypothesis testing
  • non-Bayesian behavior

Fingerprint

Dive into the research topics of 'Alternatives to Bayesian Updating'. Together they form a unique fingerprint.

Cite this