Department of Economics and Business Economics

An intertemporal model of growing awareness

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This paper presents an intertemporal model of growing awareness. It provides a framework for analyzing problems with long time horizons in the presence of growing awareness and awareness of unawareness. The framework generalizes both the standard event-tree framework and the framework from Karni and Vierø (2017) of awareness of unawareness. Axioms and a representation are provided along with a recursive formulation of intertemporal utility. This allows for tractable and consistent analysis of intertemporal problems with unawareness. To illustrate the relevance of growing awareness for dynamic decision making, the model is applied to a representative agent intertemporal asset pricing problem.

Original languageEnglish
Article number105351
JournalJournal of Economic Theory
Volume197
ISSN0022-0531
DOIs
Publication statusPublished - Oct 2021

Bibliographical note

Publisher Copyright:
© 2021 The Author

    Research areas

  • Asset pricing, Awareness, Intertemporal utility, Recursive utility, Reverse Bayesianism, Unawareness

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