Saddlepath learning, MSV learning and consistency of subjective expectations

Seonghoon Cho

Economics Letters, 2014, vol. 125, issue 2, 319-322

Abstract: Ellison and Pearlman (2011) show that determinacy implies e-stability under both full and lagged information if (1) subjective expectations are consistent with a structural model and unbiased, and (2) a learning process is given by the saddlepath relationship. This study clarifies that their equivalence result under any information set is a consequence of their assumptions about bounded rationality. The same result also holds for the standard MSV learning approach under consistency or unbiasedness assumption. Without these assumptions, the equivalence result no longer holds for either saddlepath or MSV learning.

Keywords: Determinacy; E-stability; Saddlepath learning; MSV learning; Consistency assumption (search for similar items in EconPapers)
JEL-codes: D8 E1 E5 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:125:y:2014:i:2:p:319-322

DOI: 10.1016/j.econlet.2014.09.034

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