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Believing in Multiple Equilibria

Graciela Chichilnisky; Geoffrey M. Heal; Peter A. Streufert; Jeroen M. Swinkels; Columbia University. Economics

Title:
Believing in Multiple Equilibria
Author(s):
Chichilnisky, Graciela; Heal, Geoffrey M.; Streufert, Peter A.; Swinkels, Jeroen M.; Columbia University. Economics
Date:
Type:
Working papers
Department:
Economics
Permanent URL:
Series:
Department of Economics Discussion Papers
Part Number:
684
Abstract:
If agents have common priors concerning the probability with which equilibrium is selected, they have an incentive to trade beforehand. If their trading process satisfies a certain notion of individual rationality, these trades will reduce and ultimately remove all uncertainty concerning equilibrium selection. In this sense, multiple equilibria engender institutions which can uniquely determine equilibrium.
Subject(s):
Economics
Item views:
164
Metadata:
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