An intertemporal model of growing awareness

Marie-Louise Vierø

Journal of Economic Theory, 2021, vol. 197, issue C

Abstract: This paper presents an intertemporal model of growing awareness. It provides a framework for analyzing problems with long time horizons in the presence of growing awareness and awareness of unawareness. The framework generalizes both the standard event-tree framework and the framework from Karni and Vierø (2017) of awareness of unawareness. Axioms and a representation are provided along with a recursive formulation of intertemporal utility. This allows for tractable and consistent analysis of intertemporal problems with unawareness. To illustrate the relevance of growing awareness for dynamic decision making, the model is applied to a representative agent intertemporal asset pricing problem.

Keywords: Awareness; Unawareness; Reverse Bayesianism; Intertemporal utility; Recursive utility; Asset pricing (search for similar items in EconPapers)
JEL-codes: D8 D81 D83 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: An Intertemporal Model Of Growing Awareness (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:197:y:2021:i:c:s002205312100168x

DOI: 10.1016/j.jet.2021.105351

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