An Example of Overly Revealing Rational Expectations

4 Pages Posted: 11 Oct 2012

See all articles by Walt Pohl

Walt Pohl

NHH Norwegian School of Economics; University of Zurich

Date Written: April 18, 2012

Abstract

I give a simple example of a rational expectations equilibrium with asymmetric information that reveals an implausible amount of information. In the example, the market price contains information that no individual market participant could deduce, even by observing the behavior of other market participants. I argue that more research is needed on refinements of rational expectations with asymmetric information.

Keywords: general equilibrium, rational expectations, asymmetric information

JEL Classification: D5, D8

Suggested Citation

Pohl, Walt, An Example of Overly Revealing Rational Expectations (April 18, 2012). Available at SSRN: https://ssrn.com/abstract=2159810 or http://dx.doi.org/10.2139/ssrn.2159810

Walt Pohl (Contact Author)

NHH Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway

University of Zurich ( email )

Moussonstrasse 15
Z├╝rich, 8044
Switzerland

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