We examine the connection between two stability concepts of rational expectations equilibria: expectational stability, based on the convergence of iterations of expectations, and strong rationality, based on uniqueness of the rationalizable solutions of an associated game with restrictions on...

This paper examines justifications of the rational expectations hypothesis that rely on the analysis of the agents' mental forecasting ("educing") activity which involves "forecasting the forecasts" of others etc. The corresponding eductive learning stability concept, based on the game...

The paper considers a model with two goods: a private good and an ??environmental?? good. The analysis has two basic ingredients: the two goods are imperfectly substitutable and the long run characteristics of substitution are uncertain. An ecological discount rate is defined. It is argued that...

As an eductive process, the Rational Expectations Hypothesis (REH) is itself rational if a) individual rationality is common knowledge, b) the model under consideration is 'favourable'. These points are illustrated within Muth's model. An equilibrium is Strongly Rational (SR) when the REH is...

A simple model with asymmetric information, in which inventory holders or traders submit demand curves to an auctioneer, has a unique partially revealing equilibrium. We wonder whether the agents can plausibly coordinate on this equilibrium through "eductive" reasoning relying on common...