Structure‐preserving transformations of epistemic models

Bach, C. W. and Perea, A. (2023) Structure‐preserving transformations of epistemic models. Economic Inquiry, 61 (3). pp. 693-719. ISSN 0095-2583 doi: 10.1111/ecin.13136

Abstract/Summary

The prevailing approaches to modeling interactive uncertainty with epistemic models in economics are state-based and type-based. We explicitly formulate two general procedures that transform state models into type models and vice versa. Both transformation procedures preserve the belief hierarchies as well as the common prior assumption. By means of counterexamples it is shown that our procedures are not inverse to each other. However, if attention is restricted to maximally reduced epistemic models, then isomorphisms can be constructed and an inverse relationship emerges.