Summary
In a game with rational expectations, individuals simultaneously refine their information with the information revealed by the strategies of other individuals. At a Nash equilibrium of a game with rational expectations, the information of individuals is essentially symmetric: the same profile of strategies is also an equilibrium of a game with symmetric information; and strategies are common knowledge. If each player has a veto act, which yields a minimum payoff that no other profile of strategies attains, then the veto profile is the only Nash equilibrium, and it is is an equilibrium with rational expectations and essentially symmetric information; which accounts for the impossibility of speculation.
We wish to thank Pierpaolo Battigalli, Françoise Forges, Franco Donzelli, Leonidas Koutsougeras, Aldo Rustichini, Rajiv Vohra and Nicholas Yannelis for their comments.
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Minelli, E., Polemarchakis, H. (2004). Information at equilibrium. In: Aliprantis, C.D., Arrow, K.J., Hammond, P., Kubler, F., Wu, HM., Yannelis, N.C. (eds) Assets, Beliefs, and Equilibria in Economic Dynamics. Studies in Economic Theory, vol 18. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-05858-9_21
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DOI: https://doi.org/10.1007/978-3-662-05858-9_21
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