An epistemic model of an agent who does not reflect on reasoning processes

This paper introduces an epistemic model of a boundedly rational agent under the two assumptions that (i) the agent’s reasoning process is in accordance with the model but (ii) the agent does not reflect on these reasoning processes. For such a concept of bounded rationality a semantic interpretation by the possible world semantics of the Kripke (1963) type is no longer available because the definition of knowledge in these possible world semantics implies that the agent knows all valid statements of the model. Key to my alternative semantic approach is the extension of the method of truth tables, first introduced for the propositional logic by Wittgenstein (1922), to an epistemic logic so that I can determine the truth value of epistemic statements for all relevant truth conditions. I also define an axiom system plus inference rules for knowledge- and unawareness statements whereby I drop the inference rule of necessitation, which claims that an agent knows all theorems of the logic. As my main formal result I derive a determination theorem linking my semantic with my syntactic approach.

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19 September 2012
Publication Type: Working Paper
JEL Code: B41, C72, D83