Asymmetric Information and Rationalizability Asymmetric Information and Rationalizability *

Gabriel Desgranges, Stéphane Gauthier, Gabriel Desgranges, Stéphane, Gabriel Desgranges, Stéphane Gauthier, Michel Grandmont, Roger Guesnerie, Guy Laroque, Seppo Honkapohja, Stephen Morris, Marion Oury (+2 others)
2013 Asymmetric Information and Rationalizability. Economic Theory   unpublished
We study how asymmetric information affects the set of rationalizable solutions in a linear setup where the outcome is determined by forecasts about this same outcome. The unique rational expectations equilibrium is also the unique rationalizable solution when the sensitivity of the outcome to agents' forecasts is less than one, provided that this sensitivity is common knowledge. Relaxing this common knowledge assumption, multiple rationalizable solutions arise when the proportion of agents who
more » ... rtion of agents who know the sensitivity is large, and the uninformed agents believe it is possible that the sensitivity is greater than one. Instability is equivalent to existence of some kind of sunspot equilibria. JEL classification: C62, D82, D84. Tercieux. We are particularly grateful to two referees and an associate editor for valuable comments and suggestions. The usual disclaimers apply.
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