Heifetz, Aviad and Meier, Martin and Schipper, Burkhard C (2009): Unawareness, Beliefs and Speculative Trade.
Download (561kB) | Preview
We define a generalized state-space model with interactive unawareness and probabilistic beliefs. Such models are desirable for potential applications of asymmetric unawareness. We compare unawareness with probability zero belief. Applying our unawareness belief structures, we show that the common prior assumption is too weak to rule out speculative trade in all states. Yet, we prove a generalized "No-trade" theorem according to which there can not be common certainty of strict preference to trade. Moreover, we show a generalization of the "No-agreeing-to-disagree" theorem.
|Item Type:||MPRA Paper|
|Original Title:||Unawareness, Beliefs and Speculative Trade|
|Keywords:||unawareness; awareness; zero probability; type-space; common prior; agreement; speculative trade; interactive epistemology|
|Subjects:||D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Burkhard C Schipper|
|Date Deposited:||08. Nov 2009 06:34|
|Last Modified:||19. Feb 2013 16:32|
Ahn, D. and H. Ergin (2009). Framing contingencies, Econometrica, forthcoming.
Aumann, R. (1976). Agreeing to disagree, Annals of Statistics 4, 1236-1239.
Board, O. and K.S. Chung (2009). Object-based unawareness: Theory and applications, mimeo.
Bonnano, G. and K. Nehring (1999). How to make sense of the common prior assumption under incomplete information, International Journal of Game Theory 28, 149-225.
Dekel, E., Lipman, B. and A. Rustichini (1998). Standard state-space models preclude unawareness, Econometrica 66, 159-173.
Ewerhart, C. (2001). Heterogeneous awareness and the possibility of agreement, mimeo.
Fagin, R. and J. Halpern (1988). Belief, awareness, and limited reasoning, Artificial Intelligence 34, 39-76.
Feinberg, Y. (2009). Games with unawareness, mimeo.
Feinberg, Y. (2000). Characterizing common priors in form of posteriors, Journal of Economic Theory 91, 127-179.
Gadamer, H.-G. (1960). Wahrheit und Methode, J. C. B. Mohr, Tubingen, (engl. transl., Truth and Methode, 2nd edition, Crossroad, New York, 1989).
Galanis, S. (2009a). Unawareness of theorems, mimeo.
Galanis, S. (2009b). Syntactic foundations of unawareness of theorems, mimeo.
Geanakoplos, J. (1989). Game theory without partitions, and applications to speculation and consensus, mimeo.
Grant, S. and J. Quiggin (2007). Awareness and discovery, mimeo.
Halpern, J. 2002). Characterizing the common prior assumption, Journal of Economic Theory 106, 316-355.
Halpern, J. (2001). Alternative semantics for unawareness, Games and Economic Behavior 37, 321-339.
Halpern, J. and L. Rego (2008). Interactive unawareness revisited, Games and Economic Behavior 62, 232-262.
Harsanyi, J. (1967/68). Games with incomplete information played `Bayesian' players, Part I, II, and II, Management Science 14, 159-182, 320-334, 486-502.
Heifetz, A. (2006). The positive foundation of the common prior assumption, Games and Economic Behavior 56, 105-120.
Heifetz, A., Meier, M. and B.C. Schipper (2006). Interactive unawareness, Journal of Economic Theory 130, 78-94.
Heifetz, A., Meier, M. and B.C. Schipper (2008). A canonical model for interactive unawareness, Games and Economic Behavior 62, 304-324.
Heifetz, A., Meier, M. and B.C. Schipper (2009a). Bayesian games with unawareness and unawareness perfection, mimeo.
Heifetz, A., Meier, M. and B.C. Schipper (2009b). Dynamic unawareness and rationalizable behavior, mimeo.
Hu H. and H. W. Stuart, Jr. (2001). An epistemic analysis of the Harsanyi transformation, International Journal of Game Theory 30, 517-525.
Li, J. (2009). Information structures with unawareness, Journal of Economic Theory 144, 977-993.
Li, J. (2006). Dynamic games with perfect awareness information, mimeo.
Meier, M. and B. C. Schipper (2009). Speculative trade under unawareness - The infinite case, mimeo.
Milgrom, P. and N. Stokey (1982). Information, trade and common knowledge, Journal of Economic Theory 26, 17-27.
Modica, S. (2008). Unawareness, priors and posteriors, Decisions in Economics and Finance 31, 81-94.
Modica, S. and A. Rustichini (1999). Unawareness and partitional information structures, Games and Economic Behavior 27, 265-298.
Modica, S. and A. Rustichini (1994). Awareness and partitional information structures, Theory and Decision 37, 107-124.
Monderer, D. and D. Samet (1989). Approximating common knowledge with common beliefs, Games and Economic Behavior 1, 170-190.
Morris, S. (1995). The common prior assumption in economic theory, Economics and Philosophy 11, 227-253.
Morris, S. (1994). Trade with heterogeneous prior beliefs and asymmetric information, Econometrica 62, 1327-1347.
Sadzik, T. (2006). Knowledge, awareness and probabilistic beliefs, mimeo.
Samet, D. (1999). Bayesianism without learning, Research in Economics 53, 227-242.
Samet, D. (1998). Common priors and separation of convex sets, Games and Economic Behavior 24, 172-174.
Savage, L. (1954). The foundations of statistics, John Wiley.