Non-implementation of rational expectations as a perfect Bayesian equilibrium | Zendy

Dionysius Glycopantis | Zendy; Allan Muir | Zendy; Nicholas C. Yannelis | Zendy

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Non-implementation of rational expectations as a perfect Bayesian equilibrium

Author(s) -

Dionysius Glycopantis,

Allan Muir,

Nicholas C. Yannelis

Publication year - 2005

Publication title -

economic theory

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.572

H-Index - 58

eISSN - 1432-0479

pISSN - 0938-2259

DOI - 10.1007/s00199-004-0585-2

Subject(s) - sequential equilibrium , mathematical economics , core (optical fiber) , rational expectations , economics , bayesian probability , private information retrieval , incentive compatibility , general equilibrium theory , point (geometry) , markov perfect equilibrium , public finance , bayesian game , incentive , equilibrium selection , microeconomics , econometrics , computer science , mathematics , repeated game , game theory , macroeconomics , artificial intelligence , telecommunications , geometry , computer security , nash equilibrium

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. Copyright Springer-Verlag Berlin/Heidelberg 2005Differential information economy, Rational expectations equilibrium, Coalitional Bayesian incentive compatibility, Implementation, Game trees, Private core.,

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