Characterizing the common prior assumption.
This paper provides a thorough theoretical investigation on the logical characterizations of the Common Prior Assumption (CPA). CPA has played a prominent role in economic theory, its essential meaning being that differences in beliefs among agents can be completely explained by differences in information they received. Using classical tools from modal logic, Joseph Halpern gives two different characterizations of CPA and compares them to those existing in the economics literature. The first CPA characterization is based on frame distinguishability, a concept closer to the notions typically considered in the economics literature, the results obtained for CPA frame distinguishability being similar to those already existing ones. In particular, the paper shows that finite frames (actually, finite spaces) that satisfy the CPA can be distinguished from those that do not, in terms of disagreements in expectation. However, it is also proved that there exist no formulas in the defined language which can distinguish infinite spaces satisfying the CPA, from those spaces that do not. A second approach to CPA characterization is based on finding a sound and complete axiomatization. In the proposed axiom system, the key axiom involves disagreements in expectation. Since the axiomatization is proved to be sound and complete both for the finite and infinite case, this logical language is too weak to distinguish finite and infinite spaces. This phenomenon is frequently met in various aspects of (fundamental) mathematics. Essentially, the result obtained says that in economics there exist ``nonstandard models that satisfy all the properties of the CPA expressible in the considered axiomatized language, despite the fact that these models do not satisfy the CPA (similarly to the nonstandard models of the real numbers that satisfy all the properties of the reals). Thus the two approaches characterizing the CPA behave quite differently in the case of infinite spaces. The answer to the question asking which of the two proposed CPA characterizations is more appropriate depends on each specific application. Frame distinguishability seems to be a more adequate notion when a frame is given, while axiomatizations could be more useful when only some facts about the frame are provided (e.g. implying no common knowledge of disagreement in terms of CPA).
- A Comment on Aumann's Bayesian View
- A guide to completeness and complexity for modal logics of knowledge and belief
- A logic for reasoning about probabilities
- Agreeing to disagree
- Characterizing common priors in the form of posteriors
- Common priors and separation of convex sets
- Common Priors: A Reply to Gul
- Correlated Equilibrium as an Expression of Bayesian Rationality
- Games with Incomplete Information Played by “Bayesian” Players, I–III Part I. The Basic Model
- How to make sense of the common prior assumption under incomplete information
- scientific article; zbMATH DE number 5542185 (Why is no real title available?)
- scientific article; zbMATH DE number 3559571 (Why is no real title available?)
- scientific article; zbMATH DE number 3603256 (Why is no real title available?)
- scientific article; zbMATH DE number 795590 (Why is no real title available?)
- scientific article; zbMATH DE number 3068536 (Why is no real title available?)
- On Some Completeness Theorems in Modal Logic
- Reasoning about knowledge and probability
- State Constraints in Convex Control Problems of Bolza
- Trade with Heterogeneous Prior Beliefs and Asymmetric Information
- Characterizing common priors in the form of posteriors
- Agreeing to disagree with conditional probability systems
- Conservative belief and rationality
- Belief consistency and trade consistency
- Hypergames and Bayesian games: a theoretical comparison of the models of games with incomplete information
- The positive foundation of the common prior assumption
- The wisdom of the crowd and prediction markets
- Agreeing to disagree in probabilistic dynamic epistemic~logic
- People with common priors can agree to disagree
- Finite Order Implications of Common Priors
- Common priors under incomplete information: a unification
- No trade under verifiable information
- Lexicographic probability, conditional probability, and nonstandard probability
- Finite order implications of common priors in infinite models
- Similarity of differential information with subjective prior beliefs
This page was built for publication: Characterizing the common prior assumption.
Report a bug (only for logged in users!)Click here to report a bug for this page (MaRDI item Q1867530)
