A representation of decision by analogy

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Abstract

We give a representation of analogical reasoning in choice under uncertainty. A decision maker is faced with two decision problems, a familiar and a novel one. It is shown that, under assumptions that capture the salience of alignable differences in choice, the decision maker can be construed as choosing between acts in the novel decision problem as if drawing all likelihood information from a multi-valued correspondence between states of the world in the familiar domain and states of the world in the novel domain. The latter is interpreted as an analogy between the two decision problems, and the fuzziness of the analogy is related to revealed ambiguity in the novel decision problem.

Original languageEnglish (US)
Pages (from-to)771-794
Number of pages24
JournalJournal of Mathematical Economics
Volume43
Issue number7-8
DOIs
StatePublished - Sep 1 2007

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Applied Mathematics

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