N ° 2007 - 28 Expectational coordination in a class of economic models : Strategic substitutabilities versus strategic complementarities

We consider an economic model that features : 1. a continuum of agents 2. an aggregate state of the world over which agents have an infinitesimal influence. We first propose a review, based on work by Jara-Moroni (2007), of the connections between the eductive viewpoint that puts emphasis on Strongly Rational Expectations equilibrium and the standard game-theoretical rationalizability concepts. We explore the scope and limits of this connection depending on whether standard rationalizability versus point-rationalizability, or the local versus the global viewpoint, are concerned. In particular, we define and characterize the set of Point-Rationalizable States and prove its convexity. Also, we clarify the role of the heterogeneity of beliefs in general contexts of expectational coordination (see Evans and Guesnerie (2005)). Then, as in the case of strategic complementarities the study of some best response mapping is a key to the analysis, in the case of unambiguous strategic substitutabilities the study of some second iterate, and of the corresponding two-period cycles, allows to describe the point-rationalizable states. We provide application in microeconomic and macroeconomic contexts.