Unawareness, Beliefs, and Speculative Trade

Aviad Heifetz, Martin Meier and Burkhard Schipper ()
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Aviad Heifetz: Open University of Israel
Martin Meier: Institute of Advanced Studies, Vienna

Working Papers from University of California at Davis, Department of Economics

Abstract: We define a generalized state-space model with interactive unawareness and probabilistic beliefs. Such models are desirable for potential applications of asymmetric unawareness. 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-speculative-trade" theorem according to which there can not be common certainty of strict preference to trade. Moreover, we prove a generalization of the "No-agreeing-to-disagree" theorem. Finally, we show the existence of a universal unawareness belief type space.

JEL-codes: C70 C72 D53 D80 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2011-10
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Related works:
Journal Article: Unawareness, beliefs, and speculative trade (2013)
Working Paper: Unawareness, Beliefs, and Speculative Trade (2011)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
Working Paper: Unawareness, Beliefs, and Speculative Trade (2009)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:ecl:ucdeco:11-8

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