Justifying Rational Expectations
CARESS Working Paper No. 95-04
15 Pages Posted: 24 Dec 2001
Date Written: March 1995
Abstract
In a static economy with symmetric information, the informational requirements for competitive equilibrium are very weak: markets clear and each agent is rational. With asymmetric information, the solution concept of competitive equilibrium has been generalized to rational expectations equilibrium. But now common knowledge of market clearing and rationality is required. This paper proves versions of these results in a formal model of knowledge.
Keywords: Rational Expectations, Common Knowledge
JEL Classification: D5, D8
Suggested Citation: Suggested Citation
Morris, Stephen Edward, Justifying Rational Expectations (March 1995). CARESS Working Paper No. 95-04, Available at SSRN: https://ssrn.com/abstract=294819 or http://dx.doi.org/10.2139/ssrn.294819
Do you have negative results from your research you’d like to share?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.