A Characterization of Robust Sunspot Equilibria
In nonconvex environments, a sunspot equilibrium can sometimes be destroyed by the introduction of new extrinsic information. We provide a simple test for determining whether or not a particular equilibrium survives, or is robust to, all possible reâ€¦nements of the state space. We use this test to provide a characterization of the set of robust sunspot-equilibrium allocations of a given economy: it is equivalent to the set of equilibrium allocations of the associated lottery economy.
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Levine's Working Paper Archive
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Levine's Working Paper Archive
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