Coordination on Saddle Path Solutions: the Eductive Viewpoint. 1- Linear Univariate Models
We investigate local strong rationality (LSR) in a one step forward looking univariate model with memory one. Eductive arguments are used to determine when common knowledge (CK) that the solution is near some perfect foresight path is sufficient to trigger complete coordination on that path (i.e. the path is LSR).
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