Subjective Reasoning - Games with Unawareness

Subjective Reasoning - Games with Unawareness

2004Working Paper No. 1875

The subjective framework for reasoning is extended to incorporate the representation of unawareness in games. Both unawareness of actions and decision makers are modeled as well as reasoning about others' unawareness. It is shown that a small grain of uncertainty about unawareness with rational decision makers can lead to cooperation in the finitely repeated prisoner's dilemma.