TY - UNPB

T1 - E-stability and stability of adaptive learning in models with asymmetric information

AU - Heinemann, Maik

PY - 2007

Y1 - 2007

N2 - The paper demonstrates how the E–stability principle introduced by Evans and Honkapohja [2001] can be applied to models with heterogeneous and private information in order to assess the stability of rational expectations equilibria under learning. The paper extends already known stability results for the Grossman and Stiglitz [1980] model to a more general case with many differentially informed agents and to the case where information is endogenously acquired by optimizing agents. In both cases it turns out that the rational expectations equilibrium of the model is inherently E-stable and thus locally stable under recursive least squares learning.

AB - The paper demonstrates how the E–stability principle introduced by Evans and Honkapohja [2001] can be applied to models with heterogeneous and private information in order to assess the stability of rational expectations equilibria under learning. The paper extends already known stability results for the Grossman and Stiglitz [1980] model to a more general case with many differentially informed agents and to the case where information is endogenously acquired by optimizing agents. In both cases it turns out that the rational expectations equilibrium of the model is inherently E-stable and thus locally stable under recursive least squares learning.

KW - Economics

KW - adaptive learning

KW - eductive stability

KW - rational expectations

M3 - Working papers

T3 - Working paper series in economics

BT - E-stability and stability of adaptive learning in models with asymmetric information

PB - Institut für Volkswirtschaftslehre der Universität Lüneburg

CY - Lüneburg

ER -