Abstract
Ellison and Pearlman (2011) show that determinacy implies e-stability under both full and lagged information if (1) subjective expectations are consistent with a structural model and unbiased, and (2) a learning process is given by the saddlepath relationship. This study clarifies that their equivalence result under any information set is a consequence of their assumptions about bounded rationality. The same result also holds for the standard MSV learning approach under consistency or unbiasedness assumption. Without these assumptions, the equivalence result no longer holds for either saddlepath or MSV learning.
| Original language | English |
|---|---|
| Pages (from-to) | 319-322 |
| Number of pages | 4 |
| Journal | Economics Letters |
| Volume | 125 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2014 Nov 1 |
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All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics
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Saddlepath learning, MSV learning and consistency of subjective expectations. / Cho, Seonghoon.
In: Economics Letters, Vol. 125, No. 2, 01.11.2014, p. 319-322.Research output: Contribution to journal › Article
TY - JOUR
T1 - Saddlepath learning, MSV learning and consistency of subjective expectations
AU - Cho, Seonghoon
PY - 2014/11/1
Y1 - 2014/11/1
N2 - Ellison and Pearlman (2011) show that determinacy implies e-stability under both full and lagged information if (1) subjective expectations are consistent with a structural model and unbiased, and (2) a learning process is given by the saddlepath relationship. This study clarifies that their equivalence result under any information set is a consequence of their assumptions about bounded rationality. The same result also holds for the standard MSV learning approach under consistency or unbiasedness assumption. Without these assumptions, the equivalence result no longer holds for either saddlepath or MSV learning.
AB - Ellison and Pearlman (2011) show that determinacy implies e-stability under both full and lagged information if (1) subjective expectations are consistent with a structural model and unbiased, and (2) a learning process is given by the saddlepath relationship. This study clarifies that their equivalence result under any information set is a consequence of their assumptions about bounded rationality. The same result also holds for the standard MSV learning approach under consistency or unbiasedness assumption. Without these assumptions, the equivalence result no longer holds for either saddlepath or MSV learning.
UR - http://www.scopus.com/inward/record.url?scp=84908327623&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84908327623&partnerID=8YFLogxK
U2 - 10.1016/j.econlet.2014.09.034
DO - 10.1016/j.econlet.2014.09.034
M3 - Article
AN - SCOPUS:84908327623
VL - 125
SP - 319
EP - 322
JO - Economics Letters
JF - Economics Letters
SN - 0165-1765
IS - 2
ER -