TY - JOUR
T1 - Saddlepath learning, MSV learning and consistency of subjective expectations
AU - Cho, Seonghoon
N1 - Publisher Copyright:
© 2014 Elsevier B.V.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
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.
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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 -