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Second-Order Beliefs and Second-Order Expected Utility

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Academic year: 2021

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Figure 2: αp + (1 − α)q is a mixture of one-stage lotteries but αδ p + (1 − α)δ q is a mixture of two-stage lotteries.
Figure 3: If the decision maker believes that s occurs with probability one, then P and Ψ(P, s) are equivalent.

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