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Information at equilibrium

Author

Listed:
  • POLEMARCHAKIS, H. M.
  • MINELLI, Enrico

Abstract

In a game with rational expectations individuals refine their information with the information revealed by the strategies of other individuals: their elementary acts of other individuals at each state of the world. At a Nash of a game with rational expectations, the information of individuals is essentially symmetric; the same profile is also an equilibrium of a game with symmetric information and their acts are common knowledge. If each player has a veto act, which yields a minimum payoff that no other profile of strategies attains, then the veto profile is the only Nash equilibrium, and it is an equilibrium with rational expectations and essentially symmetric information, which accounts for the impossibility of speculation.

Suggested Citation

  • POLEMARCHAKIS, H. M. & MINELLI, Enrico, 2000. "Information at equilibrium," HEC Research Papers Series 697, HEC Paris.
    • Handle: RePEc:ebg:heccah:0697
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    References listed on IDEAS

    as
    1. Geanakoplos, John D. & Polemarchakis, Heraklis M., 1982. "We can't disagree forever," Journal of Economic Theory, Elsevier, vol. 28(1), pages 192-200, October.
    2. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    3. MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1993. "Knowledge at Equilibrium," LIDAM Discussion Papers CORE 1993054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Kreps, David M., 1977. "A note on "fulfilled expectations" equilibria," Journal of Economic Theory, Elsevier, vol. 14(1), pages 32-43, February.
    5. Forges, Francoise & Minelli, Enrico, 1997. "Self-Fulfilling Mechanisms and Rational Expectations," Journal of Economic Theory, Elsevier, vol. 75(2), pages 388-406, August.
    6. Gerard Debreu, 1959. "Topological Methods in Cardinal Utility Theory," Cowles Foundation Discussion Papers 76, Cowles Foundation for Research in Economics, Yale University.
    7. Milgrom, Paul & Stokey, Nancy, 1982. "Information, trade and common knowledge," Journal of Economic Theory, Elsevier, vol. 26(1), pages 17-27, February.
    8. Forges, Francoise & Minelli, Enrico, 1997. "A Property of Nash Equilibria in Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 18(2), pages 159-175, February.
    9. repec:dau:papers:123456789/12327 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Dominik Grafenhofer & Wolfgang Kuhle, 2022. "Observing actions in global games," SN Business & Economics, Springer, vol. 2(12), pages 1-15, December.
    2. Wolfgang Kuhle, 2013. "A Global Game with Heterogenous Priors," Papers 1312.7860, arXiv.org.
    3. Dominik Grafenhofer & Wolfgang Kuhle, 2015. "Observing Each Other's Observations in a Bayesian Coordination Game," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_18, Max Planck Institute for Research on Collective Goods.
    4. Dominik Grafenhofer & Wolfgang Kuhle, 2019. "Observing Actions in Bayesian Games," Papers 1904.10744, arXiv.org.
    5. Dominik Grafenhofer & Wolfgang Kuhle, 2021. "Observing Actions in Global Games," Papers 2111.10554, arXiv.org.
    6. Dominik Grafenhofer & Wolgang Kuhle, 2014. "Observing Each Other's Observations in the Electronic Mail Game," Papers 1501.00882, arXiv.org.
    7. Grafenhofer, Dominik & Kuhle, Wolfgang, 2016. "Observing each other’s observations in a Bayesian coordination game," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 10-17.
    8. Koh, Paul S., 2023. "Stable outcomes and information in games: An empirical framework," Journal of Econometrics, Elsevier, vol. 237(1).

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    More about this item

    Keywords

    Nash equilibrium; rational expectations; common knowledge;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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