Under reduced-form learning, agents are endowed with an aggregate model, and rational expectations are then replaced with subjective expectations. This paper demonstrates that the reduced-form learning approach may be arbitrary in that a particular representation of aggregate dynamics has particular e-stability properties even though the underlying model's behavior is meant to be unique.
Bibliographical notePublisher Copyright:
© 2015 Elsevier B.V.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics