Unawareness, Beliefs, and Speculative Trade

Unawareness, beliefs, and speculative trade

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...

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Working Paper Series Unawareness , Beliefs , and Speculative Trade

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...

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Speculative Trade under Unawareness: The Infinite Case∗

We prove a “no-speculative-trade” theorem under unawareness for the infinite case. This generalizes the result for the finite case by Heifetz, Meier, and Schipper (2013).

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Speculative Trade under Ambiguity

Ambiguous beliefs may lead to speculative trade and speculative bubbles. We demonstrate this by showing that the classical Harrison and Kreps (1978) example of speculative trade among agents with heterogeneous beliefs can be replicated with agents having common ambiguous beliefs. More precisely, we show that the same asset prices and pattern of trade can be obtained in equilibrium with agents’ ...

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Speculative Trade under Ambiguity ∗ Jan

Ambiguous beliefs may lead to speculative trade and speculative bubbles. We demonstrate this by showing that the classical Harrison and Kreps (1978) example of speculative trade among agents with heterogeneous beliefs can be replicated with agents having common ambiguous beliefs. More precisely, we show that the same asset prices and pattern of trade can be obtained in equilibrium with agents’ ...

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Unawareness, Beliefs, and Speculative Trade

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