Are 'Rational Conjectures' Rational?

Louis Makowski

Journal of Industrial Economics, 1987, vol. 36, issue 1, 35-47

Abstract: The concepts of "rational conjectures" and "reasonable conjectures" are cr itically reviewed. It is shown that their operation depends crucially on an invisible, nonoptimizing "deus ex machina." Hence, these con cepts are not really suitable for understanding competition among opt imizing firms. In addition, the widely claimed "fact" that Bertrand conjectures are locally rational conjectural variations is shown to be erroneous. Copyright 1987 by Blackwell Publishing Ltd.

Date: 1987
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