IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/34727.html

Rational Disagreement

Author

Listed:
  • Nabil Al-Najjar
  • Harald Uhlig

Abstract

We propose rational disagreement as a formal framework for analyzing seemingly irrational behavior that can persist despite the wide availability of objective information in a steady-state. Agents are rational in that they correctly anticipate the distribution of aggregate outcomes, yet disagree about which specific individuals perform better than others. Notably, the subjective belief of any individual may be objectively correct. We illustrate the key concepts with a simple entry game. We show how unordered individual outcome distributions can be identified solely from aggregate statistics. We then characterize the resulting game, define its Nash equilibria, and develop a statistical test for the null hypothesis of agreement. Finally, we situate our framework within the broader literature on Bayesian games, behavioral biases, and the rational expectations hypothesis.

Suggested Citation

  • Nabil Al-Najjar & Harald Uhlig, 2026. "Rational Disagreement," NBER Working Papers 34727, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34727
    Note: AP EFG IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w34727.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:34727. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.