Information Validates the Prior: A Theorem on Bayesian Updating and Applications
| Autor: | Wing Suen, Frances Xu Lee, Navin Kartik |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Computer science
05 social sciences Certification Bayesian inference FOS: Economics and business Posterior mean Information asymmetry 0502 economics and business Prior probability Economics - Theoretical Economics Econometrics Theoretical Economics (econ.TH) General Earth and Planetary Sciences 050207 economics 050205 econometrics General Environmental Science |
| Zdroj: | American Economic Review: Insights. 3:165-182 |
| ISSN: | 2640-2068 2640-205X |
| Popis: | We develop a result on expected posteriors for Bayesians with heterogenous priors, dubbed information validates the prior (IVP). Under familiar ordering requirements, Anne expects a (Blackwell) more informative experiment to bring Bob's posterior mean closer to Anne's prior mean. We apply the result in two contexts of games of asymmetric information: voluntary testing or certification, and costly signaling or falsification. IVP can be used to determine how an agent's behavior responds to additional exogenous or endogenous information. We discuss economic implications. Comment: Corrections of typos and other minor expositional edits. The paper is now forthcoming in American Economic Review: Insights |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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