Private Uncertainty and Multiplicity

46 Pages Posted: 11 Jul 2012 Last revised: 27 Mar 2013

Date Written: November 2012


This paper provides the conditions under which small enough private uncertainty on an aggregate endogenous state of the economy can invalidate uniqueness of the equilibrium. The main result is presented in a fully microfounded macroeconomic model where agents learn from arising prices. The findings apply to a broad class of static signal extraction problems where both fundamental correlation and pay-off externalities jointly contribute to a multiplicity of equilibria. The cases where only one of these two determinants is sufficient for a multiplicity are also isolated and discussed

Keywords: dispersed information, coordination of expectations, second-order beliefs

JEL Classification: D82, D83, E3

Suggested Citation

Gaballo, Gaetano, Private Uncertainty and Multiplicity (November 2012). Banque de France Working Paper No. 387. Available at SSRN: or

Gaetano Gaballo (Contact Author)

Banque de France ( email )


Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics