Uniformly Self-Justified Equilibria

We consider dynamic stochastic economies with heterogeneous agents and introduce the concept of uniformly self-justified equilibria (USJE)—temporary for which expectations satisfy following rationality requirements: i) individuals' forecasting functions next period's endogenous variables are assumed to lie in a compact, finite-dimensional set functions, ii) forecasts constitute best uniform approximation selection equilibrium correspondence. show that contrast rational equilibria, USJE always exist, we develop simple algorithm compute them. As an application, discuss overlapping generations exchange economy. give example where recursive (rational expectations) fail exist explain how construct example. In addition, provide numerical examples illustrate our computational method.