Research

  1. Research Papers by Topics
  2. Paper Abstracts

1. Research Papers by Topics


Epistemic Game Theory

Information Economics/Mechanism Design

  • From Equals to Despots: The Dynamics of Repeated Decision Making in Partnerships with Private Information, with Vinicius Carrasco and William Fuchs

Bargaining, Negotiation, and Communication

Other(s)

  • ASEAN Financial Integration, with Geert Almekinders, Alex Mourmouras, Jianping Zhou, and Yong Sarah Zhou, IMF Working Paper No. 15/34, February 23, 2015.

2. Paper Abstracts


The Existence of Universal Knowledge Spaces

Abstract: We provide a formal framework capable of capturing players’ interactive knowledge in a strategic context with a number of desirable features. First, we can specify players’ logical and introspective abilities as well as the language that they can use in their reasoning. Second, our framework admits tractable representations of players’ knowledge and common knowledge and nests previous interactive knowledge models. The main result of the paper is that the framework admits a canonical representation of players’ knowledge. The canonical model is a ”largest” model of knowledge to which any particular knowledge space can be mapped in a unique knowledge-preserving way.


From Equals to Despots: The Dynamics of Repeated Decision Making in Partnerships with Private Information, with Vinicius Carrasco and William Fuchs

Abstract: This paper considers an optimal renegotiation-proof dynamic Bayesian mechanism in which two privately informed agents repeatedly have to take a joint action without resorting to side-payments. We provide a general framework which accommodates as special cases committee decision and collective insurance problems. Thus, we formally connect these separate strands of literature. We show: (i) first-best values can be arbitrarily approximated (but not achieved) when the players are sufficiently patient; (ii) our main result, the provision of intertemporal incentives necessarily leads to a dictatorial mechanism: in the long run the optimal scheme converges to the adoption of one player’s favorite action.


Negotiations with Limited Specifiability, with Yuichiro Kamada

Abstract: This paper studies negotiations with limited specifiability —each party may not be able to fully specify a negotiation outcome. We construct a class of negotiation protocols under which we can conduct comparative statics on specifiability as well as move structures. We find that asynchronicity of proposal announcements narrows down the equilibrium payoff set, in particular leading to a unique prediction in negotiations with a “common interest” alternative. The equilibrium payoff set is not a singleton in general, contains any payoff profile that gives each player no less than her individually-rational and worst Pareto-efficient payoff, and is weakly larger under limited specifiability than under unlimited specifiability. The degree to which limitation on specifiability affects the prediction of a negotiation depends also on the fine details of how such limitation is imposed.


Representing Unawareness on State Spaces

Abstract: We approach notions of unawareness in terms of the lack of knowledge within the framework of a standard state space model. Our questions are as follows. When and how does a state space model have a sensible form of unawareness? How does unawareness relate to ignorance and possibility? First, notions of unawareness reduce to the following two forms. A strong form of unawareness is stated as the ignorance of the possibility that an agent knows an event. A weak form of unawareness is stated as the ignorance of own knowledge. Second, we show that if an agent is unaware of an event, then she is ignorant of being unaware of it. Third, if an agent faces an infinite number of objects of knowledge, then it is possible that she knows that there is an event of which she is unaware, while she cannot know that she is unaware of any particular event. Fourth, getting more information can cause an agent to become unaware of some event.


Formalizing Common Belief with No Underlying Assumption on Individual Beliefs

Abstract: This paper formalizes common belief among players with no underlying assumption on their individual beliefs. Especially, players may not be logically omniscient in that they do not believe logical consequences of their beliefs. The key idea is to use a novel concept of common bases: a common basis is an event such that, whenever it is true, every player believes its logical consequences. The common belief in an event obtains when a common basis implies the mutual belief in that event. In the paper, individual beliefs are represented as operators on a general set algebra so that they can be qualitative or probabilistic. If players’ beliefs are assumed to be true, then common belief reduces to common knowledge. The formalization nests previous axiomatizations of common belief and common knowledge which have assumed players’ logical monotonic reasoning. The paper also studies how common belief inherits properties of individual beliefs.


On the Consistency among Prior, Posteriors, and Information Sets

Abstract: This paper studies implications of the consistency conditions among prior, posteriors, and information sets on introspective properties of qualitative belief induced from information sets. The main result reformulates the consistency conditions as: (i) the information sets, without any assumption, almost surely form a partition; and (ii) the posterior at a state is equal to the Bayes conditional probability given the corresponding information set. Implications are as follows. First, each posterior is uniquely determined. Second, qualitative belief reduces to fully introspective knowledge in a ”standard” environment. Thus, a care must be taken when one studies non-veridical belief or non-introspective knowledge. Third, an information partition compatible with the consistency conditions is uniquely determined by the posteriors. Fourth, qualitative and probability-one beliefs satisfy truth axiom almost surely. The paper also sheds light on how the additivity of the posteriors yields negative introspective properties of beliefs.