Epistemic conditions for Nash equilibrium, and common knowledge of rationality

Article Abstract:

Common knowledge of rationality is implied from the Aumann-Brandenburger conditions if payoffs are common knowledge. Such finding suggests the correlated-belief version of rationalizability by Brandenburger and Dekel (1987). Mutual knowledge of rationality is equal to common knowledge of rationality under n-player complete information games. Aside from an assumption related to a common prior, assumptions related to all other players' conjectures and each player's joint conjecture can also be considered to attain sufficient conditions for Nash equilibrium in n-player complete information games.

Analysis, Game theory, Epistemics

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Social security and demographic shocks

Article Abstract:

Social security designs' distribution of risks associated with demographic shocks was assessed with the use of an overlapping generations model with macroeconomic uncertainty. It was observed that interim optimal allocation occurs when there is no more viable allocation that will enhance the expected welfare of all generations. Such type of allocation is used when a financial asset in fixed quantity exists. With enough lump sum transfers, rational expectations equilibrium can support any stationary interim optimal allocation.

Administration of Human Resource Programs (except Education, Public Health, and Veterans' Affairs Programs), Social Security, Demographic aspects, Welfare economics

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On the convergence to homogeneous expectations when markets are complete

Article Abstract:

An equilibrium is absent when the posterior beliefs of agents are not homogenous. Utilization of a model in which stochastic endowments are received by finite long-lived agents over time shows that optimal trade strategy produces arbitrarily large resources at period 0 when the agent believes in an almost-arbitrage opportunity. Such condition suggests the possible existence of an agent who believes in an almost arbitrage opportunity when the beliefs of agents are not mutually asymptotically continuous.

Asymptotic expansions

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