Abstract:This paper investigates the learnability of the equilibrium under adaptive learning with heterogeneous and misspecified models. Agents have imperfect and mutually different information sets of economic variables, so they form heterogeneous expectations under learning rules that are differently underparameterized. Under heterogeneous learning, the economy converges to a type of restricted perceptions equilibrium, which here is called a Heterogeneous Misspecification Equilibrium (HME). The paper finds that the H… Show more
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