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Failing to Correctly Aggregate Signals

Ariel Rubinstein

Author: Ariel Rubinstein and Michele Piccione

Abstract

"The correct aggregation of two conditionally independent signals is by no means an easy task. In particular, individuals fail to recognize that two weak positive signals of a rare event together constitute strong evidence for the event, indicating the use of non-Bayesian methods. We demonstrate the dramatic effect of replacing the Bayesian approach with simpler aggregation procedures using the voting model of Duggan and Martinelli (2001)."

About the Authors

Ariel Rubinstein (pictured) is one of the world’s most distinguished economists, having made major contributions to game theory, decision theory, economics, and language. His long-standing interest in economic methodology includes research on neuroeconomics. Rubinstein has written extensively on law and economics and is a professor of economics at New York University and Tel Aviv University.

Michele Piccione is a professor of economics at the London School of Economics and Political Science. His research focus is microeconomic theory, game theory, and bounded rationality. He has authored and co-authored numerous publications. He received his PhD in economics from New York University.

Publication Details

Year: 2024

Paper

Additional Information

Type

  • Paper

  • CRADLE Law and Economics Papers

Publication Details

Publication Year: 2024