Journal article
On the limit points of an infinitely repeated rational expectations equilibrium
Economic theory, Vol.80(2), pp.465-492
09/2025
DOI: 10.1007/s00199-024-01576-7
Abstract
We study the rational expectations equilibrium (REE) in the framework of a repeated economy. In each repetition agents observe the sequence of asymmetric REE's occurred in the past to update their private information. We show that, in the limit, agents reach a symmetric information REE which exists universally (and not generically) and it is Pareto efficient and obviously incentive compatible. We also prove the converse result, i.e., given a symmetric information REE, we can construct a sequence of approximate asymmetric REE allocations that converges to the symmetric information REE. In view of the above results, the symmetric information REE provides a rationalization for the asymmetric one.
Details
- Title: Subtitle
- On the limit points of an infinitely repeated rational expectations equilibrium
- Creators
- Marialaura Pesce - University of Naples Federico IINiccolo Urbinati - University of Naples Federico IINicholas C. Yannelis - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Economic theory, Vol.80(2), pp.465-492
- DOI
- 10.1007/s00199-024-01576-7
- ISSN
- 0938-2259
- eISSN
- 1432-0479
- Publisher
- Springer Nature
- Number of pages
- 28
- Grant note
- Universit degli Studi di Napoli Federico II
- Language
- English
- Electronic publication date
- 06/04/2024
- Date published
- 09/2025
- Academic Unit
- Economics
- Record Identifier
- 9984648256902771
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