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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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.:
- Blume, Lawrence E. & Easley, David, 1982. "Learning to be rational," Journal of Economic Theory, Elsevier, vol. 26(2), pages 340-351, April.
- John Nachbar, 2010.
"Prediction, Optimization and Learning in Repeated Games,"
Levine's Working Paper Archive
576, David K. Levine.
- John H. Nachbar, 1997. "Prediction, Optimization, and Learning in Repeated Games," Econometrica, Econometric Society, vol. 65(2), pages 275-310, March.
- John H. Nachbar, 1995. "Prediction, Optimization, and Learning in Repeated Games," Game Theory and Information 9504001, EconWPA, revised 14 Feb 1996.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).
If references are entirely missing, you can add them using this form.