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| Author: | Sandroni, A. |
| Title: | Do markets favor agents able to make accurate predictions? |
| Journal: | Econometrica
2000 : NOV, VOL. 68:6, p. 1303-1342 |
| Index terms: | RATIONAL EXPECTATIONS LEARNING WEALTH |
| Language: | eng |
| Abstract: | Blume and Easley (1992) show that if agents' have the same savings rule, those who maximize the expected logarithm of next period's outcomes will eventually hold all wealth (i.e. are "most prosperous"). However, if no agent adopts this rule then the most prosperous are not necessarily those who make the most accurate predictions. Thus, agents who make inaccurate predictions need not be driven out of the market. |
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