Template-Type: ReDIF-Paper 1.0
Author-Name: Burkhard Schipper
Author-Name-First: Burkhard
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. 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.
Length: 49
File-URL: https://repec.dss.ucdavis.edu/files/uoDYauQwnH8qGYxpmSvdrytK/11-8.pdf
File-Format: application/pdf
Number: 47
Classification-JEL: C70, C72, D53, D80, D82
KeyWords: Unawareness, awareness, common prior, agreement, speculative trade, universal type-space, interactive epistemology, inattention
Creation-Date: 20111024
Handle: RePEc:cda:wpaper:47