1992 Reports
Believing in Multiple Equilibria
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.