Henrique de Oliveira, Rohit Lamba
arXiv 7 Apr 2025 · Theoretical Economics · 9 citations (OpenAlex)
arXiv:2504.05251 · PDF · DOI · OpenAlex
An analyst observes an agent take a sequence of actions. The analyst does not have access to the agent's information and ponders whether the observed actions could be justified through a rational Bayesian model with a known utility function. We show that the observed actions cannot be justified if and only if there is a single deviation argument that leaves the agent better off, regardless of the information. The result is then extended to allow for distributions over possible action sequences. Four applications are presented: monotonicity of rationalization with risk aversion, a potential rejection of the Bayesian model with observable data, feasible outcomes in dynamic information design, and partial identification of preferences without assumptions on information.