Bayesian general equilibrium

Alexis Akira Toda

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: I introduce a general equilibrium model of non-optimizing agents that respond to aggregate variables (prices and the average demand profile of agent types) by putting a “prior” on their demand. An interim equilibrium is defined by the posterior demand distribution of agent types conditional on market clearing. A Bayesian general equilibrium (BGE) is an interim equilibrium such that aggregate variables are correctly anticipated. Under weak conditions, I prove the existence and the informational efficiency of BGE. I discuss the conditions under which the set of Bayesian and Walrasian equilibria coincide and show that the Walrasian equilibrium arises from a large class of non-optimizing behavior.

Keywords: Neurosciences; Bayes rule; Distribution; Kullback-Leibler information; Maximum entropy; Economic Theory; Applied Economics; Econometrics (search for similar items in EconPapers)
Date: 2015-02-01
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Citations: View citations in EconPapers (5)

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Journal Article: Bayesian general equilibrium (2015)
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