Publications in Peer-Reviewed Journals
"The Dirty Face Problem with Unawareness", The B.E. Journals of Theoretical Economics, Vol. 8: Iss. 1 (Topics), Article 28. Available at: http://www.bepress.com/bejte/vol8/iss1/art28
ABSTRACT
By revisiting the classic dirty face problem we highlight the notion of ``unawareness'' (a simpler state space) and compare it with ``impreciseness'' (a coarser information partition). The outcomes are derived with various information structures. That allows us to 1) demonstrate a model of differing interpretations of public information using asymmetric awareness; 2) compare and contrast the impact of unawareness and impreciseness on learning; 3) analyze the value of awareness and the value of preciseness; and 4) demonstrate the effect of unawareness and impreciseness on information aggregation through indirect aggregation.
Working Papers
"Fair Disclosure and Investor Asymmetric Awareness in Stock Markets"
Version 0308, Version 1007
(Outstanding Doctoral Student Paper award, the 2007 Mid-Atlantic Regional Meeting of the American Accounting Association)
ABSTRACT
The notion of awareness is introduced to study Regulation Fair Disclosure, a rule implemented by the U.S. Security and Exchange Commission in 2000. The regulator aims to reduce information asymmetry among investors, and expects public forums to subsume the forbidden information channel of selective forums. We show that even with cooperative managers and effective technology, this is only possible under the assumption of symmetric awareness. If a professional investor is aware of more uncertainties than others are, lacking the incentive to share the insights, he would not raise critical questions and acquire relevant information at public forums. This leads to inefficient information production. We also analyze the market prices and investors' welfare under different disclosure forms and awareness assumptions. At last, we discuss the implications of asymmetric awareness on the overall benefit and cost, the empirical findings, and the policies of the regulation.
"Social Security Literacy and Retirement Well-Being?" (in progress), with Hugo Benitez-silva (Stony Brook University) and Berna Demiralp (Old Dominion University)
ABSTRACT
We build upon the growing literature on financial literacy, which studies the prevalence of lack of knowledge about various financial issues, and propose to analyze how much people know about the Social Security rules using both a small pilot survey we have already conducted, and a follow-up and extended survey, hopefully funded by this proposal. We then propose to assess the consequences of the apparent prevalence of lack of information by individuals about the rules governing the Social Security system using a realistic and empirically-based life-cycle model of retirement behavior under uncertainty. We will investigate the individual’s retirement and savings decisions under incomplete information and unawareness, in which a portion of the population does not know some or all of the rules of the system. We will compare the outcomes in these cases to the outcome under full information, computing the average welfare gain resulting from the acquisition of information regarding the Social Security system. Our analysis can illuminate the need for policies that foster knowledge of the system, which can improve welfare among Americans of all ages.
"Justifying Cursed Equilibrium via Partial Awareness" (in progress)
ABSTRACT
We show that given any finite Bayesian game with a commonly-known common prior probability distribution, its set of cursed equilibria coincides a set of Bayesian Nash equilibria of an augmented game where players perceive other players types as if they are partially aware of others' original information structures. Consistent with the intuition that cursedness implies scarce computational resource, partial awareness is equivalent to a reduction of the complexity of players' strategic computation. This result also shows the potential of using unawareness to formulate imperfect strategic sophistication.
ABSTRACT
Given two players holding a common prior and distinct information partitions, the No Bet theorem (Sebenius and Geanakoplos, 1982) says that when at a state it is common knowledge that one's conditional expectation is no less than a certain number but the other one's is not greater than it, their conditional expectations must be the same. The extended theorem generalizes the result by taking away the separating number which is sometimes not available in practice. We also generalize the extended theorem to the case where priors are heterogeneous. As an application, we show that if the ranking of each player's expectation, or just the identity of the highest/lowest one is common knowledge, players must agree in the logic of the extended theorem, but may not agree under the original No Bet theorem.
A Short Survey on the Applications of Unawareness
