Unawareness, beliefs and games

Aviad Heifetz, Martin Meier, Burkhard C. Schipper

Research output: Contribution to conferencePaperpeer-review

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.

Original languageEnglish
Pages183-192
Number of pages10
DOIs
StatePublished - 2007
Event11th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2007 - Brussels, Belgium
Duration: 25 Jun 200727 Jun 2007

Conference

Conference11th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2007
Country/TerritoryBelgium
CityBrussels
Period25/06/0727/06/07

Keywords

  • Bayesian games
  • agreement
  • awareness
  • common prior
  • equilibrium
  • incomplete information
  • interactive epistemology
  • speculative trade
  • type-space
  • unawareness

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