Foundations for Bayesian Updating

submitted by: dougramsey
We provide a simple characterization of updating rules that can be rationalized as Bayesian. Namely, we consider a general setting in which an agent observes finite sequences of signals and reports probabilistic predictions on the underlying state of the world. We study when such predictions are consistent with Bayesian updating, i.e., when does there exist some theory about the signal generation process that would be consistent with the agent behaving as a Bayesian updater. We show that the...