The Dynamics of Rational Learning Processes with Asymmetric Information
AbstractThis paper demonstrates that the dynamics of a rational learning process with private information differ substantially from those without such information. As has been shown by Jund and Vives (1996), the existence of private information has no effect upon the convergence of the learning process towards a limit equilibrium with correct expectations. Yet, as we show, the transitional dynamics of prices and the informativeness of public statistics are influenced by the presence of private information. Dependent upon the strength of the feed-back of price expectations on actual prices, it could be that the presence of private information enhances the informativeness of public statistics and thereby speeds up the learning process as well as the convergence of prices relative to a situation without such information. However, even the opposite might be true. Moreover, the existence of private information might give rise to an initially diverging learning process that nevertheless converges after some kind of learning-catastrophe occurs.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 1999 with number 742.
Date of creation: 01 Mar 1999
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-07-12 (All new papers)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.