Learning Within Rational-Expectations Equilibrium
AbstractModels of macroeconomic learning are populated by agents who possess a great deal of knowledge of the "true" structure of the economy, and yet ignore the impact of their own learning on that structure; they may learn about an equilibrium, but they do not learn within it.� An alternative learning model is presented where agents' decisions are informed by hypotheses they hold regarding the economy.� They periodically test these hypotheses against observed data, and replace them if they fail.� It is shown that agents who learn in this way spend almost all of the time approximating rational-expectations equilibria.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 591.
Date of creation: 01 Jan 2012
Date of revision:
Rational-expectations equilibrium; Learning; Hypothesis testing;
Find related papers by JEL classification:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-01 (All new papers)
- NEP-CBA-2012-02-01 (Central Banking)
- NEP-DGE-2012-02-01 (Dynamic General Equilibrium)
- NEP-MAC-2012-02-01 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John H. Nachbar, 1995.
"Prediction, Optimization, and Learning in Repeated Games,"
Game Theory and Information
9504001, EconWPA, revised 14 Feb 1996.
- John H. Nachbar, 1997. "Prediction, Optimization, and Learning in Repeated Games," Econometrica, Econometric Society, vol. 65(2), pages 275-310, March.
- John Nachbar, 2010. "Prediction, Optimization and Learning in Repeated Games," Levine's Working Paper Archive 576, David K. Levine.
- Sergiu Hart & Andreu Mas-Colell, 2002. "Uncoupled dynamics cannot lead to Nash equilibrium," Discussion Paper Series dp299, The Center for the Study of Rationality, Hebrew University, Jerusalem.
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