Non-Implementation of Rational Expectations as a Perfect Bayesian Equilibrium

Dionysius Glycopantis; Allan Muir; Nicholas C. Yannelis

doi:10.1007/s00199-004-0585-2

Back

Non-Implementation of Rational Expectations as a Perfect Bayesian Equilibrium

Journal article

Peer reviewed

Non-Implementation of Rational Expectations as a Perfect Bayesian Equilibrium

Dionysius Glycopantis, Allan Muir and Nicholas C. Yannelis

Economic theory, Vol.26(4), pp.765-791

11/01/2005

DOI: 10.1007/s00199-004-0585-2

View Online

Abstract

We point out several conceptual difficulties of the rational expectations equilibrium concept. In particular we show that such an equilibrium need not be incentive compatible and need not be implementable as a perfect Bayesian equilibrium. A comparison of rational expectations equilibria with the private core is also provided. We conclude that the private core is a more appropriate concept to capture the idea of contracts under asymmetric information.

Contract incentives

Economic expectations

Economic theory

Endowments

Expected utility

Information economy

Nash equilibrium

Rational expectations theory

State of nature

Utility functions

Details

Title: Subtitle: Non-Implementation of Rational Expectations as a Perfect Bayesian Equilibrium
Creators: Dionysius Glycopantis - City, University of London
Allan Muir - City, University of London
Nicholas C. Yannelis - University of Illinois Urbana-Champaign
Resource Type: Journal article
Publication Details: Economic theory, Vol.26(4), pp.765-791
Publisher: Springer-Verlag
DOI: 10.1007/s00199-004-0585-2
ISSN: 0938-2259
eISSN: 1432-0479
Language: English
Date published: 11/01/2005
Academic Unit: Economics
Record Identifier: 9984380446602771

Metrics

5 Record Views

17 Times Cited - Web of Science