Sequential coordination, higher-order belief dynamics and the E-stability principle

Gaetano Gaballo

Journal of Economic Dynamics and Control, 2014, vol. 44, issue C, 270-279

Abstract: This paper explores convergence in higher-order beliefs – otherwise called eductive stability – when coordination is sequential, that is, when each agent of a given type fixes his own actions after observing the ones of earlier types in a given order. The presence of sequential types enhances expectational coordination in the case of strategic substitutability, but not in the case of strategic complementarity. In particular, eductive stability can be obtained for any degree of substitutability, provided the number of sequential types is large enough. Therefore, sequential coordination opens up to the possibility that eductive convergence occurs at the same conditions of adaptive convergence, in accordance to the E-stability principle.

Keywords: Eductive learning; Rational expectation equilibria; Rationalizable set; Learning in macroeconomics; Coordination games (search for similar items in EconPapers)
JEL-codes: B41 D41 E30 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Sequential Coordination, Higher-Order Belief Dynamics and E-Stability Principle (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:44:y:2014:i:c:p:270-279

DOI: 10.1016/j.jedc.2014.04.011

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