Knowledge, Awareness and Probabilistic Beliefs

Sadzik Tomasz ()
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Sadzik Tomasz: UCLA, Los Angeles, USA

The B.E. Journal of Theoretical Economics, 2021, vol. 21, issue 2, 489-524

Abstract: Bayesian game theory investigates strategic interaction of players with full awareness but incomplete information about their environment. We extend the analysis to players with incomplete awareness, who might not be able to reason about all contingencies in the first place. We develop three logical systems for knowledge, probabilistic beliefs and awareness, and characterize their axiom systems. Bayesian equilibrium is extended to games with incomplete awareness and we show that it is consistent with common prior and speculative trade, when common knowledge of rationality is violated.

Keywords: awareness; Bayesian equilibrium; beliefs; information; interactive epistemology; knowledge; rationality; speculative trade (search for similar items in EconPapers)
JEL-codes: C70 C72 D80 D82 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/bejte-2019-0014

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