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- Title
Bayesian general equilibrium.
- Authors
Toda, Alexis
- Abstract
I introduce a general equilibrium model of non-optimizing agents that respond to aggregate variables (prices and the average demand profile of agent types) by putting a 'prior' on their demand. An interim equilibrium is defined by the posterior demand distribution of agent types conditional on market clearing. A Bayesian general equilibrium (BGE) is an interim equilibrium such that aggregate variables are correctly anticipated. Under weak conditions, I prove the existence and the informational efficiency of BGE. I discuss the conditions under which the set of Bayesian and Walrasian equilibria coincide and show that the Walrasian equilibrium arises from a large class of non-optimizing behavior.
- Subjects
ECONOMIC equilibrium; BAYESIAN analysis; ECONOMIC demand; MATHEMATICAL variables; INFORMATION measurement
- Publication
Economic Theory, 2015, Vol 58, Issue 2, p375
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-014-0849-4