Abstract
Self-confirming equilibria are limiting outcomes of purposeful interactions among a collection of adaptive agents, each of whom averages past data to approximate moments of conditional probability distributions. Self-confirming equilibria are powerful tools to investigate dynamic economic problems such as the limiting behaviour of learning systems, the selection of plausible equilibria in games and dynamic macroeconomic models, the incidence and distribution of rare events that occasionally arise as large deviations from self-confirming equilibria, and how agents respond to model uncertainty.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Cho, IK., Sargent, T.J. (2008). Self-confirming Equilibria. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2130-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2130-1
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