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| Author: | Desgranges, G. Geoffard, P-Y. Guesnerie, R. |
| Title: | Do prices transmit rationally expected information? |
| Journal: | Journal of the European Economic Association
2003 : MAR, VOL. 1:1, p. 124-153 |
| Index terms: | Asymmetric information Equilibrium analysis Prices Rationality |
| Language: | eng |
| Abstract: | A simple model with asymmetric information, in which inventory holders or traders submit demand curves to an auctioner, has a unique partially revealing equilibrium. The authors wonder whether the agents can plausibly coordinate on this equilibrium through "eductive" reasoning relying on common knowledge. The role of two effects, sensitivity and amplification, whose product should be small enough, are stressed in the analysis. |
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