COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1725 Subjectivity in Inductive Inference Itzhak Gilboa and Larry Samuelson August 2009 This paper examines circumstances under which subjectivity enhances the effectiveness
of inductive reasoning. We consider a game in which Fate chooses a data generating process
and agents are characterized by inference rules that may be purely objective (or
data-based) or may incorporate subjective considerations. The basic intuition is that
agents who invoke no subjective considerations are doomed to "overfit" the data
and therefore engage in ineffective learning. The analysis places no computational or
memory limitations on the agents -- the role for subjectivity emerges in the presence of
unlimited reasoning powers. |
