Fair enough, even though I wouldn’t call that my prior but rather my posterior after updating on my belief of what their expected utility might be.
So you propose that I update my probability to be proportional to the inverse of their expected utility?
How do I even begin to guess their utility function if this is a one-shot interaction?
How do I distinguish between honest and dishonest people?
The fallacy here is that you’re assuming the prior probability shrinks only due to complexity.
For instance, the probability could also shrink due to the fact that higher utilities are more useful to dishonest muggers than lower utilities.
Fair enough, even though I wouldn’t call that my prior but rather my posterior after updating on my belief of what their expected utility might be.
So you propose that I update my probability to be proportional to the inverse of their expected utility? How do I even begin to guess their utility function if this is a one-shot interaction? How do I distinguish between honest and dishonest people?