A funny thing happened on the way to the minimum wage
A #JHR_Threads explainer of Meer and West (2016)
Long Winded Introduction about uncertainty and the minimum wage
The Nobel Laureate Robert Aumann has an interesting theorem popularly called “Agreeing to Disagree”. Like so many observations that come from game theory, the theorem feels both ridiculous and incredibly intuitive. It starts out with the following provocative sentence:
“If two people have the same priors, and their posteriors for a given event A are common knowledge, then these posteriors must be equal. This is so even though they may be their posteriors on quite different information. In brief, people with the same priors cannot agree to disagree.” (Aumann 1976)
This theorem is weird because it is prima facie false — people agree to disagree all the time. But I don’t think Aumann is committing some sort of weird Zeno’s paradox where he denies reality. Rather he is saying that if two people start with the same beliefs and the same common knowledge, then they shouldn’t disagree. That they should is different from that th…
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