Inconsistencies in Bayesian Models of Decision-Making

But modeling devices that make sense for an unbiased decisionmaker may not make sense for a biased one. For example, why would individuals have priors and posteriors if they are destined to apply Bayes’ law incorrectly?1

A question I often ask myself.

  1. Wolfgang Pesendorfer : Behavioral Economics Comes of Age: A Review Essay on Advances in Behavioral Economics