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In this paper and its companion paper, Board & Chung [4], we provide foundations for a model of unawareness that can be used to distinguish between what an agent is unaware of and what she simply does not know. At an informal level, this distinction plays a key role in a number of recent papers such as Tirole [27] and Chung & Fort-now [6]. Here we provide a(More)
The goal of this paper is to construct a user-friendly model of unawareness. We start from an axiom system (in first-order modal logic) that enables us to express the following kinds of sentences: " the agent is not sure whether or not there is anything that he is unaware of " , and " I am not sure whether or not you are aware of something that I am not ".(More)
1 This paper studies the impact of credit markets on optimal contracting, when the agent's " interim preference " over upcoming contracts is private information because personal financial decisions affect it via the wealth effect. The main result is a severe loss of incentive provision: equilibrium contracts invariably cause the agent to shirk (i.e., exert(More)
Every abstract type of a belief-closed type space corresponds to an infinite belief hierarchy. But only finite order of beliefs is necessary for most applications. As we demonstrate, many important insights from recent development in the theory of Bayesian games with higher-order uncertainty involve belief hierarchies of order 2. We start with(More)
This paper proposes an identity-based successful prior interaction hypothesis for the inter-group prisoner's dilemma (IPD) as a microfoundation for the conjecture that prior interactions affect inter-group cooperation. We develop a model of the IPD that incorporates group-contingent social preferences and bounded rationality to derive conditions under which(More)
In this paper, we study how the presence of non-exclusive contracts limits the amount of insurance provided in a decentralized economy. We consider a dynamic Mirrleesian economy in which agents are privately informed about idiosyncratic labor productivity shocks. Agents sign privately observable insurance contracts with multiple firms (i.e., they are(More)