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Journal of Evolutionary Economics

, Volume 2, Issue 3, pp 211–231 | Cite as

The genesis of expectations and of sunspot equilibria

  • G. Laffond
  • J. Lesourne
Article

Abstract

The existence—under certain conditions—of sunspot equilibria in overlapping generations models is a well-known theoretical result, but a lot of research has still to be made to understand whether and how such equilibria may occur as a consequence of a dynamic process.

In this paper, we explore a model with individuals having simple utility functions and discover situations in which the dynamic processes of expectations and observed prices do not converge in spite of the existence of static equilibria. In other words, unfounded beliefs do still have a permanent influence on the real economy but induce erratic evolutions.

Keywords

Infinite Number Equilibrium Price Critical Mass Smoothing Parameter Price Expectation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. Azariadis C (1981) Self-fulfilling prophecies. Journal of Economic Theory 25:380–396CrossRefGoogle Scholar
  2. Azariadis C., Guesnerie R (1982) Prophéties créatrices et persistance des théories. Revue Economique 33:787–806CrossRefGoogle Scholar
  3. Chiappori P. A., Guesnerie R (1991) Sunspot equilibria in sequential models. In: Hildenbrand and Sonnenschein (eds) Handbook of Mathematical Economics, vol. IV, pp. 1683–1758Google Scholar
  4. Laffond G., Lesourne J (1990) Dynamics sunspot equilibria. Mimeo CNAMGoogle Scholar
  5. Woodford M (1990) Learning to believe in sunspots. Econometrica 58:277–308CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • G. Laffond
    • 1
  • J. Lesourne
    • 1
  1. 1.Conservatoire National des Arts et MétiersParisFrance

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