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Farsighted stability with heterogeneous expectations
1 : Paris School of Economics Paris 1
Université Paris 1 - Panthéon-Sorbonne, Ecole d'Économie de Paris
2 : University of Oregon
* : Corresponding author
This paper analyzes farsighted stable sets when agents have heterogeneous expec- tations over the dominance paths. We consider expectations functions satisfying two properties of path-persistence and consistency. We show that farsighted stable sets al- ways exist. 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 and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states which can be supported as singleton farsighted stable sets.
