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Shaping Long-Run Expectations In Problems Of Coordination

Author

Listed:
  • Fernando Vega Redondo

    (Instituto Valenciano de Investigaciones Económicas)

Abstract

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.

Suggested Citation

  • Fernando Vega Redondo, 1993. "Shaping Long-Run Expectations In Problems Of Coordination," Working Papers. Serie AD 1993-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1993-05
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    References listed on IDEAS

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    2. Vega-Redondo, Fernando, 1997. "Shaping long-run expectations in problems of coordination," European Journal of Political Economy, Elsevier, vol. 13(4), pages 783-806, December.
    3. Oyama, Daisuke, 2009. "Agglomeration under forward-looking expectations: Potentials and global stability," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 696-713, November.
    4. Yasushi Asako & Tatsushi Okuda, 2017. "Guiding the Economy Toward the Target Inflation Rate: An Evolutionary Game Theory Approach," IMES Discussion Paper Series 17-E-03, Institute for Monetary and Economic Studies, Bank of Japan.

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