Alpha-consistent expectations equilibria

Jesus Crespo Cuaresma, Gerhard Sorger

Publikation: Working/Discussion PaperWU Working Paper

13 Downloads (Pure)

Abstract

We modify the concept of consistent expectations equilibria introduced in Hommes and Sorger (1998) in two ways: (i) the consistency condition requires that the probability that the agents reject their perceived law of motion in any period does not exceed a given level and (ii) there may exist exogenous stochastic shocks. The concept is illustrated by two examples using a linear economic system. In one of the examples consistency implies rational expectations, in the other example it does not.

Publikationsreihe

ReiheWorking Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"
Nummer33

WU Working Paper Reihe

  • Working Papers SFB \Adaptive Information Systems and Modelling in Economics and Management Science\

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