Fundamental Agreement: A New Foundation for the Harsanyi Doctrine

UC Davis Working Paper No. 96-02

Posted: 18 Dec 1996

See all articles by Giacomo Bonanno

Giacomo Bonanno

University of California, Davis - Department of Economics

Klaus Nehring

University of California, Davis - Department of Economics

Date Written: February 1996

Abstract

The "Harsanyi Doctrine" asserts that differences in individuals' beliefs are to be attributed entirely to differences in information. In its embodiment as a Common Prior assumption it is central to the economics of information and the foundations of game theory. This paper attempts to provide a framework for the Harsanyi Doctrine (in an incomplete information framework) based on two qualitative properties of individuals' belief hierarchies: Fundamental Agreement and Shared Worlds. A general notion of "agreeing to disagree" about "belief indices" satisfying a Bayesian Sure-Thing Principle is introduced and illustrated by a range of examples and subsequently characterized as equivalent to a local version of the Common Prior assumption. Fundamental Agreement is defined as the absence of any such (implicit) agreement to disagree. The non-trivial gap between this and Harsanyi Consistency proper is bridged by a novel Shared Worlds condition, which requires individuals' beliefs about what is commonly believed to be equal. Common belief in the conjunction of Fundamental Agreement and Shared Worlds is then shown to be equivalent to Harsanyi Consistency. On the technical level, this paper is probably the first to (have to) seriously confront the failure of the common belief operator to satisfy the axiom of "Negative Introspection."

JEL Classification: C72

Suggested Citation

Bonanno, Giacomo F. and Nehring, Klaus, Fundamental Agreement: A New Foundation for the Harsanyi Doctrine (February 1996). UC Davis Working Paper No. 96-02. Available at SSRN: https://ssrn.com/abstract=3605

Giacomo F. Bonanno (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
916-752-1574 (Phone)
916-752-9382 (Fax)

Klaus Nehring

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
916-752-3379 (Phone)
916-752-9382 (Fax)

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