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Title:Unawareness, beliefs, and speculative trade PDF Logo
Authors:Heifetz, Aviad
Meier, Martin
Schipper, Burkhard
Issue Date:2011
Series/Report no.:Working Papers, University of California, Department of Economics 11,8
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.
Subjects:unawareness
awareness
common prior
agreement
speculative trade
universal type-space
interactive epistemology
inattention
JEL:C70
C72
D53
D80
D82
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, UC Davis

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