Farsighted Stability With Heterogeneous Expectations

42 Pages Posted: 17 Jun 2019

See all articles by Francis Bloch

Francis Bloch

Paris School of Economics (PSE)

Anne van den Nouweland

University of Oregon - Department of Economics

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Date Written: June 5, 2019

Abstract

This paper analyzes farsighted stability when agents have heterogeneous expectations over the dominance paths. We consider expectation functions satisfying the two properties of justifiability and maximality and define stable alternatives as unique stationary points of the expectation function of some agent. We characterize stable alternatives in one-to-one matching models and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states that can be supported as farsightedly stable.

Keywords: farsighted stable sets, heterogeneous expectations, one-to-one matching, voting, effectivity functions

JEL Classification: C71, D72, D74

Suggested Citation

Bloch, Francis and van den Nouweland, Anne, Farsighted Stability With Heterogeneous Expectations (June 5, 2019). Available at SSRN: https://ssrn.com/abstract=3400094 or http://dx.doi.org/10.2139/ssrn.3400094

Francis Bloch

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Anne Van den Nouweland (Contact Author)

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States
541-346-1267 (Phone)
541-346-1243 (Fax)

HOME PAGE: http://https://sites.google.com/view/annevandennouweland/

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