 Strongly rational expectations equilibria with endogenous acquisition of informationGabriel Desgranges and Maik Heinemann No 35, Computing in Economics and Finance 2004 from Society for Computational Economics Abstract: This paper analyzes conditions for existence of a strongly rational expectations equilibrium (SREE) in models with private information, where the amount of private information is endogenously determined. It is shown that the conditions for existence of a SREE known from models with exogenously given private information do not change as long as it is impossible to use the information transmitted through market prices. In contrast, these conditions are too weak, when there is such learning from prices. It turns out that the properties of the function which describes the costs that are associated with the individual acquisition of information are important in this respect. In case of constant marginal costs, prices must be half as informative than private signals in order for a SREE to exist. An interpretation of this result that falls back on the famous Grossman-Stiglitz-Paradox is also given. Keywords: Eductive Learning; Private Information; Informational Efficiency; Rational Expectations; Strongly Rational Expectations Equilibrium (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:sce:scecf4:35 Access Statistics for this paper More papers in Computing in Economics and Finance 2004 from Society for Computational Economics Contact information at EDIRC. |
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