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Farsighted Stability with Heterogeneous Expectations

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  • Francis Bloch
  • Anne van den Nouweland

Abstract

This paper analyzes farsighted stable sets when agents have heterogeneous expectations over the dominance paths. We consider expectation functions satisfying two properties of path-persistence and consistency. We show that farsighted stable sets with heterogeneous expectations always exist and that any singleton farsighted stable set with common expectations is a farsighted stable set with heterogeneous expectations. We characterize singleton farsighted stable sets with heterogeneous expectations in one-to-one matching models and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states that can be supported as singleton farsighted stable sets.

Suggested Citation

  • Francis Bloch & Anne van den Nouweland, 2017. "Farsighted Stability with Heterogeneous Expectations," ETA: Economic Theory and Applications 259479, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemth:259479
    DOI: 10.22004/ag.econ.259479
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    References listed on IDEAS

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    More about this item

    Keywords

    Research Methods/ Statistical Methods;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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