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Title:Interactive Unawareness and Speculative Trade PDF Logo
Authors:Heifetz, Aviad
Meier, Martin
Schipper, Burkhard C.
Issue Date:2003
Series/Report no.:Bonn econ discussion papers 2003,17
Abstract:The standard state-spaces of asymmetric information preclude non-trivial forms of unawareness (Dekel, Lipman and Rustichini, 1998). We introduce a generalized state-space model that allows for non-trivial unawareness among several individuals, and which satisfies strong properties of knowledge as well as all the desiderata on unawareness proposed this far in the literature. In an example of speculative trade, we demonstrate how mutual unawareness of fundamentals allows for common knowledge of willingness to trade together with strict preference for trade. Such a state of affairs is impossible to model in standard information structures with strong properties of knowledge.
Subjects:unawareness
awareness
knowledge
interactive epistemology
speculative trade
bounded perception
JEL:C70
D82
D80
C72
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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