Rational Expectations Equilibria: Existence and Representation

Bhowmik, Anuj and Cao, Jiling (2015): Rational Expectations Equilibria: Existence and Representation.

Abstract

In this paper, we continue to explore the equilibrium theory under ambiguity. For a model of a pure exchange and asymmetric information economy with a measure space of agents whose exogenous uncertainty is described by a complete probability space, we establish a representation theorem for a Bayesian or maximin rational expectations equilibrium allocation in terms of a state-wise Walrasian equilibrium allocation. This result also strengthens the theorems on the existence and representation of a (Bayesian) rational expectations equilibrium or a maximin rational expectations equilibrium in the literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: Asymmetric information; Bayesian rational expectations equilibrium; Maximin rational expectations equilibrium; Pure exchange economy; Walrasian equilibrium.
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

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