@article{85,
  keywords = {Consumer Economics: Theory (D11), Equilibrium, Information, Search, Learning, Information and Knowledge, Communication, Belief, Unawareness (D83), Criteria for Decision-Making under Risk and Uncertainty (D81), Probability},
  author = {Pietro Ortoleva},
  title = {Modeling the Change of Paradigm: Non-Bayesian Reactions to Unexpected News},
  abstract = {Bayes{\textquoteright} rule has two well-known limitations: 1) it does not model the reaction to zero-probability events; 2) a sizable empirical evidence documents systematic violations of it. We characterize axiomatically an alternative updating rule, the Hypothesis Testing model. According to it, the agent follows Bayes{\textquoteright} rule if she receives information to which she assigned a probability above a threshold. Otherwise, she looks at a prior over priors, updates it using Bayes{\textquoteright} rule for second-order priors, and chooses the prior to which the updated prior over priors assigns the highest likelihood. We also present an application to equilibrium refinement in game theory.},
  year = {2012},
  journal = {American Economic Review},
  volume = {102},
  pages = { - 2436},
  month = {October 2012},
  isbn = {0002-8282, 0002-8282},
  url = {https://search.proquest.com/docview/1081421594?accountid=13314},
  note = {plain_text},
  language = {eng},
}