Strategic Foundations of Efficient Rational Expectations

Paulo Barelli, Srihari Govindan and Robert Wilson ()

The Review of Economic Studies, 2024, vol. 91, issue 6, 3190-3216

Abstract: We study an economy with traders whose payoffs are quasilinear and whose private signals are informative about an unobserved state parameter. The limit economy has infinitely many traders partitioned into a finite set of symmetry classes called types. Market mechanisms in a class that includes auctions yield the same outcome as the Walrasian rational expectations equilibrium if and only if the efficient allocation has a monotonicity property. Examples illustrate cases where they differ. Monotonicity restricts the heterogeneity among traders’ types.

Keywords: Auctions; Double auctions; Equilibria; Rational expectations; Information aggregation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:91:y:2024:i:6:p:3190-3216.

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