Believing in Multiple Equilibria
Graciela Chichilnisky; Geoffrey M. Heal; Peter A. Streufert; Jeroen M. Swinkels
- Believing in Multiple Equilibria
Heal, Geoffrey M.
Streufert, Peter A.
Swinkels, Jeroen M.
- Working papers
- Permanent URL:
- Department of Economics Discussion Papers
- Part Number:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- 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.
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