No trade and yes trade theorems for heterogeneous priors

Alia Gizatulina, Ziv Hellman

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


We show that contrary to currently widely-held misperceptions, the classical no trade theorem obtains even under heterogeneous priors. That is, when priors are not common, speculative trade is still impossible under common knowledge of rationality. However, trade becomes mutually acceptable if at least one party to the trade puts at least some slight probability on the other party being irrational. We also derive bounds on disagreements in the case of heterogeneous priors and common p-beliefs.

Original languageEnglish
Pages (from-to)161-184
Number of pages24
JournalJournal of Economic Theory
StatePublished - Jul 2019

Bibliographical note

Funding Information:
The research of Ziv Hellman was supported by Israel Science Foundation Grant 1626/18.

Publisher Copyright:
© 2019 Elsevier Inc.


  • Common knowledge
  • Common priors
  • No betting theorem
  • No trade theorem
  • Rationality
  • Speculative trade


Dive into the research topics of 'No trade and yes trade theorems for heterogeneous priors'. Together they form a unique fingerprint.

Cite this