Where do central bank priors come from and how do policymakers evaluate a model before empirical probabilities are available? To address these questions, we analyze two central banks that choose priors about a rare disaster with the help of expert policy teams. Policymakers are misspecification...

Decision theory has relatively little to say about the formal choice of priors. We pursue the issue of prior choice in a framework that builds on consumer theory. We analyze discovery decisions of a reasoner, in an environment of hypotheses with heterogeneous, subjective plausibility. We...

Where do prior beliefs come from and how do decisionmakers ascribe confidence in a theory before probabilities are available? To address these questions, we outline an axiomatic approach for selection of priors, where the reasoner is misspecification averse, and exhibits rare event...