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Information at equilibrium

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  • E. Minelli
  • H. Polemarchakis

Abstract

In a game with rational expectations, individuals simultaneously refine their information with the information revealed by the strategies of other individuals. At a Nash equilibrium of a game with rational expectations, the information of individuals is essentially symmetric: the same profile of strategies is also an equilibrium of a game with symmetric information; and strategies are common knowledge. If each player has a veto act, which yields a minimum payoff that no other profile of strategies attains, then the veto profile is the only Nash equilibrium, and it is is an equilibrium with rational expectations and essentially symmetric information; which accounts for the impossibility of speculation. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • E. Minelli & H. Polemarchakis, 2003. "Information at equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 573-584, March.
  • Handle: RePEc:spr:joecth:v:21:y:2003:i:2:p:573-584
    DOI: 10.1007/s00199-002-0260-4
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    References listed on IDEAS

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    1. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    2. Forges, Francoise & Minelli, Enrico, 1997. "Self-Fulfilling Mechanisms and Rational Expectations," Journal of Economic Theory, Elsevier, vol. 75(2), pages 388-406, August.
    3. Milgrom, Paul & Stokey, Nancy, 1982. "Information, trade and common knowledge," Journal of Economic Theory, Elsevier, vol. 26(1), pages 17-27, February.
    4. Geanakoplos, John D. & Polemarchakis, Heraklis M., 1982. "We can't disagree forever," Journal of Economic Theory, Elsevier, vol. 28(1), pages 192-200, October.
    5. MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1993. "Knowledge at Equilibrium," CORE Discussion Papers 1993054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Kreps, David M., 1977. "A note on "fulfilled expectations" equilibria," Journal of Economic Theory, Elsevier, vol. 14(1), pages 32-43, February.
    7. Gerard Debreu, 1959. "Topological Methods in Cardinal Utility Theory," Cowles Foundation Discussion Papers 76, Cowles Foundation for Research in Economics, Yale University.
    8. Forges, Francoise & Minelli, Enrico, 1997. "A Property of Nash Equilibria in Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 18(2), pages 159-175, February.
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    Cited by:

    1. Wolfgang Kuhle, 2016. "A global game with heterogenous priors," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(2), pages 167-185, October.
    2. Grafenhofer, Dominik & Kuhle, Wolfgang, 2016. "Observing each other’s observations in a Bayesian coordination game," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 10-17.

    More about this item

    Keywords

    Keywords and Phrases: Nash equilibrium; Rational expectations; Common knowledge.; JEL Classification Numbers: D82.;

    JEL classification:

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

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