Economics Lunchtime Seminar Series. "Economics of Latent Representation" (joint work with Larry Samuelson)
Published: 25 February 2025
12 March 2025. Professor Jakub Steiner, Zurich University and Cerge-Ei
Professor Jakub Steiner, Zurich University and Cerge-Ei
"Economics of Latent Representation" (joint work with Larry Samuelson)
Wednesday, 12 March 2025. 13:00-14:00
Room 582, Adam Smith Business School
Abstract
We study maximum-likelihood estimation and updating, subject to computational, cognitive, or behavioral constraints. We jointly characterize constrained estimates and updating within a framework reminiscent of a machine learning algorithm. Without frictions, the framework simplifies to standard maximum-likelihood estimation and Bayesian updating. Our central finding is that under certain intuitive cognitive constraints, simple models yield the most effective constrained fit to data—more complex models offer a superior fit, but the agent may lack the capability to assess this fit accurately. With some additional structure, the agent’s problem is isomorphic to a familiar rational inattention problem.
Bio
Jakub Steiner is an economic theorist working at Zurich University and Cerge-Ei in Prague with interests in Game Theory, Behavioural Economics, and Information Economics.
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First published: 25 February 2025