Date of Award
Spring 2023
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Economics
First Advisor
Samuelson, Larry
Abstract
This dissertation studies several economic questions related to decision making under uncertainty. In the first chapter, I consider the question of to what extent an external observer can infer the underlying information structure by observing an equilibrium action distribution in an incomplete information game. I investigate this issue in a general linear-quadratic-Gaussian framework. A simple class of canonical information structures is offered and proves rich enough to rationalize any possible equilibrium action distribution that can arise under an arbitrary information structure. I show that the class is parsimonious in the sense that the relevant parameters can be uniquely pinned down by an observed equilibrium outcome, up to some qualifications. This implies, for example, that the accuracy of each agent's signal about the state is identified, as measured by how much observing the signal reduces the state variance. Moreover, I show that a canonical information structure characterizes the lower bound on the amount by which each agent's signal can reduce the state variance, across all observationally equivalent information structures. The lower bound is tight, for example, when the actual information structure is uni-dimensional, or when there are no strategic interactions among agents, but in general, there is a gap since agents' strategic motives confound their private information about fundamental and strategic uncertainty. The second chapter is based on my joint work with Federico Echenique, Yuta Nakamura, Luciano Pomatto, and Jamie Vinson. We propose a model of incomplete preferences, termed twofold multiprior preferences, in which an act f is ranked above an act g only when f provides higher utility in a worst-case scenario than what g provides in a best-case scenario. The model explains the experimental phenomenon, called failures of contingent reasoning, captured through a weakening of the state-by-state monotonicity (or dominance) axiom. Our model gives rise to rich comparative statics results, which demonstrate that the two important decision criteria in the literature---subjective expected utility representation and obvious dominance---can be encapsulated as the respective extreme cases of our model. We present an application to second-price auctions and illustrate that our model can explain a wide array of anomalistic bidding behaviors caused by failures of contingent reasoning, yet it can provide sharper predictions than obvious dominance. The third chapter, coauthored with Carlo Cusumano, extends the analysis of the second chapter by studying a general class of twofold preferences that compare different acts based on two possibly different utility functions. We find that the twofold preferences are useful for analyzing economic problems for at least two reasons. From a behavioral perspective, it enables theoretical models to account for the indecisiveness of a decision maker's choice in a way depending on the scale of odds. From a modeling perspective, the twofold approach can be a unified framework for modeling various incomplete preferences that differ in additional independence-type axioms to be imposed. Our series of axiomatization results provide the characterizations of the incomplete counterparts of existing complete preferences in the literature.
Recommended Citation
Miyashita, Masaki, "Essays on Decision Making Under Uncertainty" (2023). Yale Graduate School of Arts and Sciences Dissertations. 931.
https://elischolar.library.yale.edu/gsas_dissertations/931
