Unawareness, Beliefs and Games

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 196

Classification and Topics

• Classification: Wirtschaft ; Game Theory and Bargaining Theory: General ; Noncooperative Games ; Information, Knowledge, and Uncertainty: General ; Asymmetric and Private Information; Mechanism Design
• Subject: unawareness ; awareness ; type-space ; Bayesian games ; incomplete information ; equilibrium ; common prior ; agreement ; speculative trade ; interactive epistemology

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heifetz, Aviad ; Meier, Martin ; Schipper, Burkhard C.
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2007

Further information

• DOI: doi:10.5282/ubm/epub.13356
• Handle: http://hdl.handle.net/10419/93834
• URN: urn:nbn:de:bvb:19-epub-13356-6
• Last update: 10.03.2025, 11:42 AM CET