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Partial Revelation with Rational Expectations

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  • Heifetz, Aviad
  • Polemarchakis, Heracles M.

Abstract

For alternative specifications of an economy under uncertainty, we build a partially revealing Rational Expectations Equilibrium (REE). At equilibrium, no individual knows the state of the world or the quantities traded by other individuals. The combination of these partial revelation properties is not a feature of the examples of partial revelation in the literature. A general proposition characterizes the residual dimension of uncertainty at a smooth REE.
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Suggested Citation

  • Heifetz, Aviad & Polemarchakis, Heracles M., 1998. "Partial Revelation with Rational Expectations," Journal of Economic Theory, Elsevier, vol. 80(1), pages 171-181, May.
  • Handle: RePEc:eee:jetheo:v:80:y:1998:i:1:p:171-181
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    References listed on IDEAS

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    1. Dutta, Jayasri & Morris, Stephen, 1997. "The Revelation of Information and Self-Fulfilling Beliefs," Journal of Economic Theory, Elsevier, vol. 73(1), pages 231-244, March.
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    6. Allen, Beth, 1981. "A class of monotone economies in which rational expectations equilibria exist but prices do not reveal all information," Economics Letters, Elsevier, vol. 7(3), pages 227-232.
    7. Rahi, Rohit, 1995. "Partially revealing rational expectations equilibria with nominal assets," Journal of Mathematical Economics, Elsevier, vol. 24(2), pages 137-146.
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    9. Sanford J. Grossman, 1977. "The Existence of Futures Markets, Noisy Rational Expectations and Informational Externalities," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 431-449.
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    Cited by:

    1. Lall Ramrattan & Michael Szenberg, 2012. "The impact of The General Theory on Economic Theory and the Development of Public Policies: A Nested Vision of Keynes’s Ideas with the Classical Vision through a Panoramic View of his Works," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 8, Edward Elgar Publishing.
    2. Scott Condie & Jayant V. Ganguli, 2011. "Ambiguity and Rational Expectations Equilibria," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 821-845.
    3. Jean-Pierre Zigrand, 2001. "Rational Limits to Arbitrage," FMG Discussion Papers dp392, Financial Markets Group.
    4. Zigrand, Jean-Pierre, 2001. "Rational limits to arbitrage," LSE Research Online Documents on Economics 25068, London School of Economics and Political Science, LSE Library.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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