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Shaping long-run expectations in problems of coordination

  • Vega-Redondo, Fernando

When far-sighted agents may adjust their behavior only gradually , the issue of equilibrium selection in games becomes one of tension between "history" and "expectations". This paper analyzes whether, in this context, a planner may intervene successfully through short-run policies which redirect expectations away from the inertia of undesired history. The possibilities and limitations of such approach to "expectation management" are studied in a game-theoretic framework where both the planner and the population are involved in a struggle to impose their (credible) commitment possibilities.

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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 13 (1997)
Issue (Month): 4 (December)
Pages: 783-806

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Handle: RePEc:eee:poleco:v:13:y:1997:i:4:p:783-806
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544

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