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First we show that even under non-common priors the classical no trade theorem obtains. However, speculative trade becomes mutually acceptable, if traders put at least slight probability on the trading partner being irrational. Our model, thus, provides a generalization of the result of Neeman (1996) for the case of heterogeneous priors. We also derive bounds on disagreements in the case of heterogeneous priors and p-common beliefs.

Proceedings Sixteenth Conference on Theoretical Aspects of Rationality and Knowledge