Unawareness, beliefs, and speculative trade

Aviad Heifetz, Martin Meier and Burkhard Schipper

Games and Economic Behavior, 2013, vol. 77, issue 1, 100-121

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 cannot be common certainty of strict preference to trade. Moreover, we prove a generalization of the “No-agreeing-to-disagree” theorem.

Keywords: Unawareness; Awareness; Common prior; Agreement; Speculative trade; Interactive epistemology; Inattention (search for similar items in EconPapers)
JEL-codes: C70 C72 D53 D80 D82 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Unawareness, Beliefs, and Speculative Trade (2011)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:77:y:2013:i:1:p:100-121

DOI: 10.1016/j.geb.2012.09.003

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