27 June 2024 - 2:30 pm Aula Fanfani (5th floor)

Speacker: Nicholas C. Yannelis (Department of Economics, Henry B.Tippie College of Business, University of Iowa)

Title: On the limit points of an infinitely repeated rational expectations equilibrium

Abstract
We study the Rational Expectations Equilibrium (REE) in the framework of a repeated economy. In each repetition agents observe the sequence of asymmetric REE’s occurred in the past to update their private information. We show that, in the limit, agents reach a symmetric information REE which exists universally (and not generically) and it is Pareto efficient and obviously incentive compatible. We also prove the converse result, i.e., given a symmetric information REE, we can construct a sequence of approximate asymmetric REE allocations that converges to the symmetric information REE. In view of the above results, the symmetric information REE provides a rationalization for the asymmetric one.