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Alpha-consistent expectations equilibria

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We modify the concept of consistent expectations equilibria introduced in Hommes and Sorger (1998) in two ways: (i) the consistency condition requires that the probability that the agents reject their perceived law of motion in any period does not exceed a given level and (ii) there may exist exogenous stochastic shocks. The concept is illustrated by two examples using a linear economic system. In one of the examples consistency implies rational expectations, in the other example it does not. (author's abstract) ; Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

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Jesus Crespo Cuaresma, Gerhard Sorger

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