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Similarity of differential information with subjective prior beliefs |
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| Authors: | M. Ali Khan Yeneng Sun Rabee Tourky Zhixiang Zhang |
| Affiliation: | aDepartment of Economics, The Johns Hopkins University, Baltimore, MD 21218, USA;bDepartment of Mathematics, National University of Singapore, 2 Science Drive 2, Singapore 117543, Singapore;cDepartment of Economics, National University of Singapore, 1 Arts Link, Singapore 117570, Singapore;dSchool of Economics, The University of Queensland, Brisbane, Australia |
| Abstract: | We present a complete, separable and metrizable topology on the product space of information and (subjective) beliefs. Such a topology formalizes similarity of differential information without the assumption of a common prior, but under the assumption that objectively impossible events are considered impossible by subjective beliefs. As an application to the theory of the consumer, we provide results on the continuity of expected utility and demand functions. We also provide continuity results for the value of information and the insurance premium as defined in the literature. |
| Keywords: | Topologies on information Differential information Subjective prior beliefs Complete separable metric space |
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