Skip to main content
    • Aa
    • Aa
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 114
  • Cited by
    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Alonso, Ricardo and Câmara, Odilon 2016. Bayesian Persuasion with Heterogeneous Priors. Journal of Economic Theory,

    Fritz, Peter and Lederman, Harvey 2016. Standard State Space Models of Unawareness (Extended Abstract). Electronic Proceedings in Theoretical Computer Science, Vol. 215, p. 141.

    Ghossoub, Mario 2016. Arrow's Theorem of the Deductible with Heterogeneous Beliefs. North American Actuarial Journal, p. 1.

    Gong, Binglin Pan, Deng and Shi, Donghui 2016. New Investors and Bubbles: An Analysis of the Baosteel Call Warrant Bubble. Management Science,

    Johnson, Timothy C. 2016. Rethinking reversals. Journal of Financial Economics, Vol. 120, Issue. 2, p. 211.

    Lee, Yoon-Ho Alex and Klerman, Daniel 2016. The Priest-Klein Hypotheses: Proofs and Generality. International Review of Law and Economics,

    Van Wesep, Edward D. 2016. The Quality of Expertise. Management Science,

    Yu, Jianfeng and Xu, Weidong 2016. A Strategic Asset Pricing Model for Relative Performance Concern. Emerging Markets Finance and Trade,

    Banerjee, Snehal and Green, Brett 2015. Signal or noise? Uncertainty and learning about whether other traders are informed. Journal of Financial Economics, Vol. 117, Issue. 2, p. 398.

    Bayar, Onur Chemmanur, Thomas J. and Liu, Mark H. 2015. A Theory of Capital Structure, Price Impact, and Long-Run Stock Returns under Heterogeneous Beliefs. Review of Corporate Finance Studies, Vol. 4, Issue. 2, p. 258.

    Dominiak, Adam and Lefort, Jean-Philippe 2015. “Agreeing to disagree” type results under ambiguity. Journal of Mathematical Economics, Vol. 61, p. 119.

    Halpern, Joseph Y. and Kets, Willemien 2015. Ambiguous language and common priors. Games and Economic Behavior, Vol. 90, p. 171.

    Hédoin, Cyril 2015. Accounting for constitutive rules in game theory. Journal of Economic Methodology, Vol. 22, Issue. 4, p. 439.

    Khrennikov, Andrei 2015. Quantum version of Aumann’s approach to common knowledge: Sufficient conditions of impossibility to agree on disagree. Journal of Mathematical Economics, Vol. 60, p. 89.

    Kim, Jaesoo 2015. Managerial beliefs and incentive policies. Journal of Economic Behavior & Organization, Vol. 119, p. 84.

    Kuhle, Wolfgang 2015. A global game with heterogenous priors. Economic Theory Bulletin,

    LEDERMAN, HARVEY 2015. PEOPLE WITH COMMON PRIORS CAN AGREE TO DISAGREE. The Review of Symbolic Logic, Vol. 8, Issue. 01, p. 11.

    Marinacci, Massimo 2015. MODEL UNCERTAINTY. Journal of the European Economic Association, Vol. 13, Issue. 6, p. 1022.

    Oliveros, Santiago and Várdy, Felix 2015. Demand for Slant: How Abstention Shapes Voters' Choice of News Media. The Economic Journal, Vol. 125, Issue. 587, p. 1327.

    Ottaviani, Marco and Sørensen, Peter Norman 2015. Price Reaction to Information with Heterogeneous Beliefs and Wealth Effects: Underreaction, Momentum, and Reversal†. American Economic Review, Vol. 105, Issue. 1, p. 01.


The Common Prior Assumption in Economic Theory

  • Stephen Morris (a1)
  • DOI:
  • Published online: 01 December 2008

Why is (it that) common priors are implicit or explicit in the vast majority of the differential information literature in economics and game theory? Why has the economic community been unwilling, in practice, to accept and actually use the idea of truly personal probabilities in much the same way that it did accept the idea of personal utility functions? After all, in (Savage's expected utility theory), both the utilities and probabilities are derived separately for each decision maker. Why were the utilities accepted as personal, and the probabilities not?

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

M. Allais 1953. ‘Le comportement de l'homme rationnel devant le risque. Critique des postulats de l'ecole americaine’. Econometrica, 21:503–46

F. Allen S. Morris and A. Postlewaite . 1993. ‘Finite bubbles with short sales constraints and asymmetric information’, journal of Economic Theory, 61:206–29

F. Anscombe and R. Aumann . 1963. ‘A definition of subjective probability’. Annals of Mathematical Statistics, 34:199305

R. Aumann 1976. ‘Agreeing to Disagree’, The Annals of Statistics, 4:1236–9

R. Aumann 1987. ‘Correlated equilibrium as an expression of Bayesian rationality’. Econometrica, 55:118

K. Basu 1992. ‘Comment’ in Proceedings of the World Bank Annual Conference on Development Economics. L. Summers and S. Shah , (eds.)

W. Beaver 1968. ‘The information content of annual earnings announcements’. Empirical Research in Accounting: Selected Studies, supplement to Journal of Accounting Research, 6:6792

D. Bernheim 1984. ‘Rationalizable strategic behavior’. Econometrica, 52:1007–28

D. Bernheim 1986. ‘Axiomatic characterizations of rational choice in strategic environments’. Scandinavian journal of Economics, 88:473–88

F. Black 1986. ‘Noise’, journal of Finance, 41:529–43

W. Boge and T. Eisele . 1979. ‘On the solutions of Bayesian games’. International journal of Came Theory, 8:193215

A. Brandenburger and E. Dekel . 1987. ‘Rationalizability and correlated equilibria’. Econometrica, 55:1391–402

A. Brandenburger and E. Dekel . 1993. ‘Hierarchies of beliefs and common knowledge’. journal of Economic Theory, 59:189–98

A. Brandenburger , E. Dekel and J. Geanakoplos . 1992. ‘Correlated equilibrium with generalized information structures’. Games and Economic Behavior, 4:182201

H. Carlsson and E. van Damme . 1993. ‘Global games and equilibrium selection’. Econometrica, 61:9891018

J. De Long , A. Shleifer L. Summers , and R. Waldmann . 1990. ‘Noisy Trader Risk in Financial Markets’, journal of Political Economy, 98:703–38

G. Debreu 1974. ‘Excess Demand Functions’, journal of Mathematical Economics, 1:1521

D. Duffie and C. Huang . 1985. ‘Implementing Arrow-Debreu equilibria by continuous trading of few long-lived securities’. Econometrka, 53:1337–56

D. Foster and P. Young . 1990. ‘Stochastic evolutionary game dynamics’. Theoretical Population Biology, 38:219–32

D. Fudenberg and D. Levine . 1993. ‘Self-confirming equilibrium’. Econometrka, 61:523–45

J. Geanakoplos and H. Polemarchakis . 1982. ‘We can't disagree forever’, journal of Economic Theory, 28:192200

S. Grossman 1976. ‘On the efficiency of competitive stock markets where agents have diverse expectations’, journal of Finance, 31:573–85

F. Hahn 1977. ‘Exercises in conjectural equilibrium analysis’. Scandinavian journal of Economics, 79:210–26

P. Hammond 1983. ‘Ex-post optimality as a dynamically consistent objective for collective choice under uncertainty’. In Social Choice and Welfare, P. Pattanaik and M. Salles (eds.). North-Holland

M. Harris and A. Raviv . 1993. ‘Differences in opinion make a horse race’. Revieiu of Financial Studies, 6:473506

M. Harrison and D. Kreps . 1978. ‘Speculative investor behavior in a stock market with heterogeneous expectation’. Quarterly Journal of Economics, 92:323–36

J. Harsanyi 1967. ‘Games with incomplete information played by “Bayesian” players. Part I: the basic model’. Management Science, 14:159–82

J. Harsanyi 1968a. ‘Games with incomplete information played by “Bayesian” players. Part II: Bayesian equilibrium points’. Management Science, 14:320–34

J. Heckman and T. McCurdy . 1988. ‘Empirical tests of labor-market equilibrium: an evaluation’. Carnegie-Rochester Conference Series on Public Policy, 28:231–58

E. Kalai and E. Lehrer . 1993a. ‘Rational learning leads to Nash equilibrium’. Econometrka, 61:1019–15

E. Kalai and E. Lehrer . 1993b. ‘Subjective equilibrium in repeated games,Econometrka, 61:1231–40

M. Kandori , G. Mailath and R. Rob . 1992. ‘Learning, mutation and long run equilibria in games: a general theory and applications’. Econometrica, 61:2956

M Kurz . 1994b. ‘On the structure and diversity of rational beliefs’. Economic Theory, 4:124

A. Kyle 1985. ‘Continuous auctions and insider trading’. Econometrica, 53:1315–35

J.-F Mertens . and S. Zamir . 1985. ‘Formulation of Bayesian analysis for games with incomplete information’. International Journal of Came Theory, 14:129

P. Milgrom and J. Roberts . 1990. ‘Rationalizability, learning and equilibrium in games with strategic complementarities’. Econometrica, 58:1255–78

P. Milgrom and N. Stokey . 1982. ‘Information, trade and common knowledge’. Journal of Economic Theory, 26:1727

S. Morris 1994. ‘Trade with heterogeneous prior beliefs and asymmetric information’. Econometrica, 62:1327–48

R. Nau and K. McCardle . 1990. ‘Coherent behavior in noncooperative games’. Journal of Economic Theory, 50:424–44

R. Nau and K. McCardle . 1991. ‘Arbitrage, rationality and equilibrium,Theory and Decision, 31:199240

Y. Nyarko 1991b. ‘Learning in mis-specified models and the possibility of cycles’. Journal of Economic Theory, 55:416–27

R. Quandt 1986. ‘Betting and equilibrium’. Quarterly Journal of Economics, 101:201–7

J. Ritter 1991. ‘The long-run performance of initial public offerings’. Journal of Finance, 46:327

M. Rothschild 1974. ‘A two-armed bandit theory of market pricing’, journal of Economic Theory, 9:185202

A. Rubinstein 1993. ‘On price recognition and computational complexity in a monopolistic model’, journal of Political Economy, 101:473–84

F. Schick 1986. ‘Dutch bookies and money pumps’, journal of Philosophy, 83:112–19

J. Sebenius and J. Geanakoplos . 1983. ‘on't bet on it: contingent agreements with asymmetric information’, journal of the American Statistical Association, 78:382, 424–26

H. Shin 1992. ‘Prices of state contingent claims with insider traders, and the favorite-longshot bias’. Economic journal, 102:411, 426–35

H. Sonnenschein 1973. ‘Do Walras's identity and continuity characterize the class of community excess demand functions?journal of Economic Theory, 6:345–54

H. Varian 1985. ‘Divergence of opinion in financial markets: a note’, journal of Finance, 40:309–17

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
  • URL: /core/journals/economics-and-philosophy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *