Unawareness, Beliefs and Games

Heifetz, Aviad; Meier, Martin und Schipper, Burkhard C. (März 2007): Unawareness, Beliefs and Games. SFB/TR 15 Discussion Paper No. 196

Abstract

We define a generalized state-space model with interactive unawareness and probabilistic beliefs. Such models are desirable for many potential applications of asymmetric unawareness. We develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We use our unawareness belief structure to 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.

• Dokumententyp: Paper
• Keywords: unawareness, awareness, type-space, Bayesian games, incomplete information, equilibrium, common prior, agreement, speculative trade, interactive epistemology
• Fakultät: Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems ; Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C4 - Experimentelle Analyse von rationalen und beschränkt rationalen Theorien des Marktverhaltens
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: C70, C72, D80, D82
• Sprache: Englisch