Innovation is typically a trial-and-error process. While some research paths lead to the innovation sought, others result in dead ends. Because firms benefit from their competitors working in the wrong direction, they do not reveal their dead-end findings. Time and resources are wasted on...

Consider two agents who learn the value of an unknown parameter by observing a sequence of private signals. Will the agents commonly learn the value of the parameter, i.e., will the true value of the parameter become approximate common-knowledge? If the signals are independent and identically...

I construct a state space model with unawareness following Aumann (1976). Dekel, Lipman and Rustichini (1998a) show that standard state space models are incapable of representing unawareness. The model circumvents the impossibility result by endowing the agent with a subjective state space that...

This paper extends Li (2008b) to the multi-agent environment, where players reason about each other's awareness as well as knowledge, subject to their own awareness constraints. I characterize the interactive knowledge hierarchies under unawareness, which significantly differ from those in the...

We study models that combine search, monetary exchange, price posting by sellers, and buyers with preferences that differ across random meetings; say, because sellers in different meetings produce different varieties of the same good. We show how these features interact to influence the price...

This paper demonstrates that a misspecified model of information processing interferes with long-run learning and allows inefficient choices to persist in the face of contradictory public information. I consider an observational learning environment where agents observe a private signal about a...

A fad is something that is popular for a time, then unpopular. For example, in the 1960s tailfins on cars were popular, in the 1970s they were not. I study a model in which fads are driven through the channel of imperfect information. Some players have better information about past actions of...