Informational Equilibrium.
Abstract
Decision making over time in an uncertain environment has motivated much research, and given rise to different definitions of equilibria. Research on Temporary Equililbria concentrated on the consistency of agents when making forecasts, together with classical rational behavior under risk. Rational Expectation Equilibria were developed from the seminal paper of Muth until the model of Anderson-Sonnenschein provided an existence theorem: an equilibrium exists if agents make decisions which generate through equilibrium market price; the probability distribution they used in making their decisions. We call Informational Equilibrium an equilibrium of decisions and forecasts of agents in a dynamic process: agents use their forecasts to make their decisions and these decisions generate the system a future distribution which matches the forecasts. The structure of the model is quite general and is not specially related to a sequence of markets.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1982
- Accession Number
- ADA121804
Entities
People
- Robert Kast
Organizations
- Stanford University