Reports

Believing in Multiple Equilibria

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

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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More About This Work

Academic Units
Economics
Publisher
Department of Economics, Columbia University
Series
Department of Economics Discussion Papers, 684
Published Here
February 17, 2011

Notes

August 1992.