Abstract
In single-person decision theory, Bayesian rationality requires the agent first to attach subjective probabilities to each uncertain event, and then to maximize the expected value of a von Neumann—Morgenstern utility function (or NMUF) that is unique up to a cardinal equivalence class. When the agent receives new information, it also requires subjective probabilities to be revised according to Bayes’ rule.
November 1996 revision of a paper presented to the SITE (Stanford Institute of Theoretical Economics) summer workshop on “Game Theory: Epistemic and Other Foundational Issues”. The paper is based on an earlier presentation to the International Symposium in Honor of John C. Harsanyi on “Game Theory, Experience, Rationality: Foundations of the Social Sciences, Economics and Ethics” organized by the Institute Vienna Circle in Vienna, June 12-15, 1996. I am grateful to Marco Mariotti and Pierpaolo Battigalli for most helpful discussions of this and related work.
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Hammond, P.J. (1998). Consequentialism and Bayesian Rationality in Normal Form Games. In: Leinfellner, W., Köhler, E. (eds) Game Theory, Experience, Rationality. Vienna Circle Institute Yearbook [1997], vol 5. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1654-3_16
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