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FROM RATIONALITY TO BOUNDED RATIONALITY *
Author(s) -
ZHENG ZIYU
Publication year - 2005
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.2005.00270.x
Subject(s) - bounded rationality , rationality , nash equilibrium , microeconomics , economics , asset (computer security) , mathematical economics , complete information , bounded function , computer science , mathematics , mathematical analysis , computer security , political science , law
We investigate the role of bounded rationality in asset pricing and information efficiency. We show that the market stays between the weak‐form efficiency and the semi‐strong‐form efficiency in a market with a single asymmetric information and without noise supply. We show the existence of an overall equilibrium in which the publicly available information can be priced and is ‘almost free’, and the majority of the agents choose to stay uninformed. We show the existence of a Nash competitive equilibrium in an information game.