Bayesian Analysis and Uncertainty in Economic Theory

1. Front Matter

   Pages i-xiv

   PDF

2. Introduction

   • Richard M. Cyert, Morris H. DeGroot

   Pages 1-6

3. Bayesian Decision Theory

   • Richard M. Cyert, Morris H. DeGroot

   Pages 7-26

4. Behavioral and Control Theory of the Firm

   • Richard M. Cyert, Morris H. DeGroot

   Pages 27-40

5. Bayesian Analysis and Duopoly Theory

   • Richard M. Cyert, Morris H. DeGroot

   Pages 41-56

6. Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem

   • Richard M. Cyert, Morris H. DeGroot

   Pages 57-73

7. Cooperation and Learning in a Duopoly Context

   • Richard M. Cyert, Morris H. DeGroot

   Pages 74-92

8. Interfirm Learning and the Kinked Demand Curve

   • Richard M. Cyert, Morris H. DeGroot

   Pages 93-108

9. Sequential Strategies in Dual Control Problems

   • Richard M. Cyert, Morris H. DeGroot

   Pages 109-126

10. Adaptive Utility

    • Richard M. Cyert, Morris H. DeGroot

    Pages 127-143

11. Some Examples of Adaptive Utility

    • Richard M. Cyert, Morris H. DeGroot

    Pages 144-151

12. Sequential Investment Decisions

    • Richard M. Cyert, Morris H. DeGroot

    Pages 152-161

13. Capital Allocation within Firms

    • Richard M. Cyert, Morris H. DeGroot

    Pages 162-170

14. Rational Expectations

    • Richard M. Cyert, Morris H. DeGroot

    Pages 171-185

15. Epilogue

    • Richard M. Cyert, Morris H. DeGroot

    Pages 186-188

16. Back Matter

    Pages 189-206

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We began this research with the objective of applying Bayesian methods of analysis to various aspects of economic theory. We were attracted to the Bayesian approach because it seemed the best analytic framework available for dealing with decision making under uncertainty, and the research presented in this book has only served to strengthen our belief in the appropriateness and usefulness of this methodology. More specif­ ically, we believe that the concept of organizational learning is funda­ mental to decision making under uncertainty in economics and that the Bayesian framework is the most appropriate for developing that concept. The central and unifying theme of this book is decision making under uncertainty in microeconomic theory. Our fundamental aim is to explore the ways in which firms and households make decisions and to develop models that have a strong empirical connection. Thus, we have attempted to contribute to economic theory by formalizing models of the actual pro­ cess of decision making under uncertainty. Bayesian methodology pro­ vides the appropriate vehicle for this formalization.

• economic theory

• Carnegie Mellon University, Pittsburgh, USA

  Richard M. Cyert, Morris H. DeGroot

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