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Paradoxes of Perfect Foresight in General Equilibrium Theory

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  • Johnson, Joseph

Abstract

Intertemporal General Equilibrium Theory cannot be used to settle the Capital Controversy. The device of using dated commodities to avoid dynamic analysis excludes, artificially, strategic behaviour. The auctioneer plays an unsuspectedly stronger role in the dynamic economy than in the static economy, if capital goods are present.

Suggested Citation

  • Johnson, Joseph, 2006. "Paradoxes of Perfect Foresight in General Equilibrium Theory," MPRA Paper 85, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85
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    File URL: https://mpra.ub.uni-muenchen.de/85/1/MPRA_paper_85.pdf
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    References listed on IDEAS

    as
    1. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, vol. 21(1), pages 140-165, August.
    2. Shapley, Lloyd S. & Shubik, Martin, 1969. "On market games," Journal of Economic Theory, Elsevier, vol. 1(1), pages 9-25, June.
    3. Morishima,Michio, 1996. "Dynamic Economic Theory," Cambridge Books, Cambridge University Press, number 9780521563246, January.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Benjamin Patrick Evans & Mikhail Prokopenko, 2021. "Bounded rationality for relaxing best response and mutual consistency: The Quantal Hierarchy model of decision-making," Papers 2106.15844, arXiv.org, revised Mar 2023.

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    More about this item

    Keywords

    General Equilibrium; perfect foresight; foresight; Capital Controversy; Cambridge Controversy;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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