 Exercises in Conjectural EquilibriaA chapter in Topics in Disequilibrium Economics, 1978, pp 64-80 from Palgrave Macmillan Abstract: Abstract In this paper one considers an economy in which individuals can transact at “false” prices. When they do they encounter quantity constraints, this in turn, as Arrow has noted, stops them acting as perfect competitors. In particular they must form an hypothesis concerning a possibility of affecting their quantity constraints by a change of price. This hypothesis is called a conjecture. A set of prices and quantity signals at which desired trades are achieved and no prices change is advantageous under the conjecture is a conjectural equilibrium. Economies can have conjectural equilibria even when they have a Walrasian one. Naturally one wants a theory of conjecture formation. In what follows it is shown, mainly by examples, that it is not fruitful to look for rational conjectural equilibria (defined in the sequel). One concludes that at best one could hope that agents conjecture Marshallian schedules. Keywords: Demand Curve; Profit Function; Walrasian Equilibrium; Perfect Competitor; Pure Exchange Economy (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-03917-3_4 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-03917-3_4 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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