Unawareness, Beliefs and Speculative Trade

Burkhard Schipper, Martin Meier and Aviad Heifetz
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Aviad Heifetz: Department of Economics, University of California Davis

No 280, Working Papers from University of California, 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. 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.

Keywords: unawareness; awareness; zero probability; type-space; common prior; agreement; speculative trade; interactive epistemology (search for similar items in EconPapers)
JEL-codes: C70 C72 D80 D82 (search for similar items in EconPapers)
Pages: 43
Date: 2009-11-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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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)
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