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 47, 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. 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.

Keywords: Unawareness; awareness; common prior; agreement; speculative trade; universal type-space; interactive epistemology; inattention (search for similar items in EconPapers)
JEL-codes: C70 C72 D53 D80 D82 (search for similar items in EconPapers)
Pages: 49
Date: 2011-10-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Unawareness, beliefs, and speculative trade (2013)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
Working Paper: Unawareness, Beliefs and Speculative Trade (2009)
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