Object-based unawareness: Theory and applications

DOI link to open access article: Object-based unawareness: Theory and applications

Oliver J. Board, Kim-Sau Chung

Journal of Mechanism and Institution Design
Volume 7, issue 1, pages 1-43 (December 2022)
doi: 10.22574/jmid.2022.12.001


In this paper and its companion paper, Board & Chung (2021), we provide foundations for a model of unawareness that can be used to distinguish between what an agent is unaware of and what she simply does not know. At an informal level, this distinction plays a key role in a number of recent papers such as Tirole (2009) and Chung & Fortnow (2007). Here we provide a set-theoretic (i.e., non-linguistic) version of our framework. We use our object-based unawareness structures to investigate two applications. The first application provides a justification for the contra proferentem doctrine of contract interpretation, under which ambiguous terms in a contract are construed against the drafter. Our second application examines speculative trade. Keywords: Unawareness, legal doctrine, no-trade theorem.

JEL Classification Numbers: D83, D86, D91, K12.