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Believing in Multiple Equilibria

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

Title:
Believing in Multiple Equilibria
Author(s):
Chichilnisky, Graciela
Heal, Geoffrey M.
Streufert, Peter A.
Swinkels, Jeroen M.
Date:
Type:
Working papers
Department:
Economics
Permanent URL:
Series:
Department of Economics Discussion Papers
Part Number:
684
Publisher:
Department of Economics, Columbia University
Publisher Location:
New York
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:
148
Metadata:
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