Farsighted Stability with Heterogeneous Expectations

This paper analyzes farsighted stable sets when agents have heterogeneous expectations over the dominance paths. We consider expectation functions satisfying two properties of path-persistence and consistency. We show that farsighted stable sets with heterogeneous expectations always exist and that any singleton farsighted stable set with common expectations is a farsighted stable set with heterogeneous expectations. We characterize singleton farsighted stable sets with heterogeneous expectations in one-to-one matching models and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states that can be supported as singleton farsighted stable sets.


Issue Date:
Jul 13 2017
Publication Type:
Working or Discussion Paper
Language:
English
Total Pages:
43
JEL Codes:
C71; D72; D74
Series Statement:
31.2017




 Record created 2017-07-13, last modified 2017-08-29

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