Agreeing to agree and Dutch books

Yi Chun Chen, Ehud Lehrer, Jiangtao Li*, Dov Samet, Eran Shmaya

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

We say that agreeing to agree is possible for an event E if there exist posterior beliefs of the agents with a common prior such that it is common knowledge that the agents' posteriors for E coincide. We propose a notion called Dutch book which is a profile of interim contracts between an outsider and the agents based on the occurrence of E, such that the outsider makes positive profit in all states. We show that in a finite state space, when the agents cannot tell whether E occurred or not, agreeing to agree is possible for E if and only if there is no Dutch book on E. This characterization also holds in countable state spaces with two agents. We weaken the notion of Dutch book to characterize agreeing to agree in a countable state space with multiple agents, when each set in each agent's information partition is finite.

Original languageEnglish (US)
Pages (from-to)108-116
Number of pages9
JournalGames and Economic Behavior
Volume93
DOIs
StatePublished - Sep 1 2015

Keywords

  • Agreement theorem
  • Common knowledge
  • Common prior
  • Dutch book
  • No trade theorem

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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