Bubbles are rational

Abstract : As we show using the notion of equilibrium in the theory of infinite sequential games, bubbles and escalations are rational for economic and environmental agents, who believe in an infinite world. This goes against a vision of a self regulating, wise and pacific economy in equilibrium. In other words, in this context, equilibrium is not a synonymous of stability. We attempt to draw from this statement methodological consequences and a new approach to economics. To the mindware of economic agents (a concept due to cognitive psychology) we propose to add coinduction to properly reason on infinite games. This way we refine the notion of rationality.
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https://hal-ens-lyon.archives-ouvertes.fr/ensl-00819188
Contributor : Pierre Lescanne <>
Submitted on : Tuesday, April 30, 2013 - 1:46:36 PM
Last modification on : Tuesday, April 24, 2018 - 1:52:28 PM
Long-term archiving on : Tuesday, April 4, 2017 - 2:16:32 AM

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  • HAL Id : ensl-00819188, version 1
  • ARXIV : 1305.0101

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Pierre Lescanne. Bubbles are rational. 2013. ⟨ensl-00819188⟩

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