Zimper, Alexander2024-02-222024-02-222023-09Zimper, A. 2023, 'Unrealized arbitrage opportunities in naive equilibria with non-Bayesian belief processes', Mathematical Social Sciences, vol. 125, pp. 27-41, doi : 10.1016/j.mathsocsci.2023.07.001.0165-4896 (print)1879-3118 (online)10.1016/j.mathsocsci.2023.07.001http://hdl.handle.net/2263/94811DATA AVAILABILITY : No data was used for the research described in the article.A non-Bayesian decision maker forms posterior beliefs through an – ever so slightly – violation of Bayes’ rule. A naive equilibrium is a competitive equilibrium for a multiperiod complete markets economy such that every economic agent – Bayesian or non-Bayesian – assumes that all economic agents are Bayesian decision makers. If all agents are indeed Bayesian decision makers, the naive equilibrium coincides with the standard concept of an arbitrage-free equilibrium for which dynamic price ratios are comprehensively pinned down as the equilibrium price ratios of Arrow–Debreu securities in a static economy. If at least one agent is a non-Bayesian decision maker, however, some equilibrium price ratios will change over time. These changing price ratios imply the existence of unrealized dynamic arbitrage opportunities in a naive equilibrium with non-Bayesian decision makers.en© 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license.Non-Bayesian updatingDynamic inconsistencyBounded rationalityRepresentative agentDynamic arbitrage opportunitiesSDG-08: Decent work and economic growthArticle