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Knowledge, Awareness and Probabilistic Beliefs

Author

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  • Sadzik Tomasz

    (UCLA, Los Angeles, USA)

Abstract

Bayesian game theory investigates strategic interaction of players with full awareness but incomplete information about their environment. We extend the analysis to players with incomplete awareness, who might not be able to reason about all contingencies in the first place. We develop three logical systems for knowledge, probabilistic beliefs and awareness, and characterize their axiom systems. Bayesian equilibrium is extended to games with incomplete awareness and we show that it is consistent with common prior and speculative trade, when common knowledge of rationality is violated.

Suggested Citation

  • Sadzik Tomasz, 2021. "Knowledge, Awareness and Probabilistic Beliefs," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 21(2), pages 489-524, June.
    • Handle: RePEc:bpj:bejtec:v:21:y:2021:i:2:p:489-524:n:3
    DOI: 10.1515/bejte-2019-0014
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    More about this item

    Keywords

    awareness; Bayesian equilibrium; beliefs; information; interactive epistemology; knowledge; rationality; speculative trade;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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