Updating toward the signal

B-Tier
Journal: Economic Theory
Year: 2012
Volume: 50
Issue: 3
Pages: 765-786

Authors (2)

Christopher Chambers (not in RePEc) Paul Healy (Ohio State University)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Modelers frequently assume (either implicitly or explicitly) that an agent’s posterior expectation of some variable lies between their prior mean and the realization of an unbiased signal of that variable. We call this property updating toward the signal (UTS). We show that if the prior and signal error densities are both symmetric and quasiconcave then UTS will occur. If, for a given prior, UTS occurs for all symmetric and quasiconcave error densities, then in fact the prior must be symmetric and quasiconcave. Similar characterizations are derived for two additional updating requirements that are strictly weaker than UTS. Copyright The Author(s) 2012

Technical Details

RePEc Handle
repec:spr:joecth:v:50:y:2012:i:3:p:765-786
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25