Depth of knowledge and the effect of higher order uncertainty

Stephen Morris, Andrew Postlewaite, Hyun Song Shin

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

A number of recent papers have highlighted the importance of uncertainty about others' information in models of asymmetric information. We introduce a notion that reflects the depth of knowledge in an information system. We show how the depth of knowledge can be used to bound the effect of higher order uncertainty in certain problems. We further provide bounds on the size of bubbles in finite horizon rational expectations models where the bounds depend on the depth of knowledge.

Original languageEnglish (US)
Pages (from-to)453-467
Number of pages15
JournalEconomic Theory
Volume6
Issue number3
DOIs
StatePublished - Oct 1 1995

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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