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Inductive reasoning about unawareness

  • Simon Grant

    ()

    (Department of Economics, Rice University)

  • John Quiggin

    ()

    (Department of Economics, University of Queensland)

We develop a model of games with awareness that allows for differential levels of awareness. We show that, for the standard modal logical interpretations of belief and awareness, a player cannot believe there exist propositions of which he is unaware. Nevertheless, we argue that a boundedly rational individual may regard the possibility that there exist propositions of which she is unaware as being supported by inductive reasoning, based on past experience and consideration of the limited awareness of others. In this paper, we provide a formal representation of inductive reasoning in the context of a dynamic game with awareness. We show that, given differential awareness over time and between players, individuals can derive inductive support for propositions expressing their own unawareness.

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Paper provided by Risk and Sustainable Management Group, University of Queensland in its series Risk & Uncertainty Working Papers with number WPR09_1.

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Date of creation: Jun 2009
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Handle: RePEc:rsm:riskun:r09_1
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  1. Modica, Salvatore & Rustichini, Aldo, 1999. "Unawareness and Partitional Information Structures," Games and Economic Behavior, Elsevier, vol. 27(2), pages 265-298, May.
  2. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2006. "Interactive unawareness," Journal of Economic Theory, Elsevier, vol. 130(1), pages 78-94, September.
  3. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C, 2009. "Dynamic Unawareness and Rationalizable Behavior," MPRA Paper 15058, University Library of Munich, Germany.
  4. Gollier & Jullien & Treich, 2000. "Scientific progress and irreversibility : an economic interpretation of the Precautionary principle," Working Papers 156240, Institut National de la Recherche Agronomique, France.
  5. repec:ecl:ucdeco:09-10 is not listed on IDEAS
  6. Eddie Dekel & Barton L. Lipman & Aldo Rustichini, 1998. "Standard State-Space Models Preclude Unawareness," Econometrica, Econometric Society, vol. 66(1), pages 159-174, January.
  7. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
  8. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  9. Grant, Simon & Quiggin, John, 2006. "Learning and Discovery," Risk and Sustainable Management Group Working Papers 151174, University of Queensland, School of Economics.
  10. Halpern, Joseph Y. & Rêgo, Leandro C., 2009. "Reasoning about knowledge of unawareness," Games and Economic Behavior, Elsevier, vol. 67(2), pages 503-525, November.
  11. Grant, Simon & Quiggin, John, 2012. "Bounded Awareness, Heuristics and the Precautionary Principle," Risk and Sustainable Management Group Working Papers 151203, University of Queensland, School of Economics.
  12. Simon Grant & John Quiggin, 2008. "Bounded rationality and small worlds," Risk & Uncertainty Working Papers WPR08_2, Risk and Sustainable Management Group, University of Queensland.
  13. Leandro Rêgo & Joseph Halpern, 2012. "Generalized solution concepts in games with possibly unaware players," International Journal of Game Theory, Springer, vol. 41(1), pages 131-155, February.
  14. Spyros Galanis, 2011. "Syntactic foundations for unawareness of theorems," Theory and Decision, Springer, vol. 71(4), pages 593-614, October.
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