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Title:Unawareness, beliefs and speculative trade PDF Logo
Authors:Heifetz, Aviad
Meier, Martin
Schipper, Burkhard C.
Issue Date:2009
Series/Report no.:Working Papers, University of California, Department of Economics 09,20
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.
zero probability
common prior
speculative trade
interactive epistemology
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, UC Davis

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