Rational expectations in microeconomic models: An overview

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Abstract

This paper is an expository introduction to several topics of current research in the general equilibrium theory of rational expectations. More specifically, we discuss the existence of exact and approximate rational expectations equilibria, the implementation of equilibria, the behavior of learning and smoothing processes by which traders construct expectations from repeated observations of the market, and the lagged use of the information revealed by prices in an intertemporal sequence of markets. The purpose of this discussion is to introduce papers on these topics appearing in the Journal of Economic Theory Symposium on Rational Expectations in Microeconomic Models.

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    The partial support of the National Science Foundation and of the University of Minnesota School of Management is gratefully acknowledged. The views expressed are those of the authors and do not necessarily reflect those of Bell Laboratories or the Bell System.

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