Template-Type: ReDIF-Paper 1.0
Author-Name: Burkhard C. Schipper
Author-Name-First: Burkhard C.
Author-Name-Last: Schipper
Author-Name: Martin Meier
Author-Name-First: Martin
Author-Name-Last: Meier
Author-Name: Aviad Heifetz
Author-Name-First: Aviad
Author-Name-Last: Heifetz
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Unawareness, Beliefs and Speculative Trade
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.
Length: 43
File-URL: https://repec.dss.ucdavis.edu/files/nLrKDpR1DPRndqFi39M1NK7U/09-20.pdf
File-Format: application/pdf
Number: 280
Classification-JEL: C70, C72, D80, D82
KeyWords: unawareness, awareness, zero probability, type-space, common prior, agreement, speculative trade, interactive epistemology
Creation-Date: 20091105
Handle: RePEc:cda:wpaper:280