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Abstract

Imagine a Bayesian decision agent who is keen to invest only in technologies or businesses that are conductive to achieving a sustainable economic future. Being initially keen to invest in a certain technology, subsequently two pieces of new information are received that both individually reduce the agent’s inclination to make that investment. In such a situation, it would be natural to assume that the simultaneous consideration of both pieces of information should further reduce the agent’s initial enthusiasm; after all the Bayesian method has been called “nothing but common sense reduced to calculation.” Somewhat surprisingly, making general statements like this about the double conditional probability requires substantial additional assumptions in classical Bayesian probability theory. We investigate four schemes of assumptions that allow ‘reasonable’ conclusions about the double conditional probability. We compare this with two schemes for the quantum probability model where the double conditional results from sequential updating through projections.

Keywords

economic decision making sustainability cognitive psychology Bayesian probability updating quantum-like models

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Probability Updating in the Classical and the Quantum Model

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