New equilibrium concept revolutionizes market information inference and pricing strategies.
The article introduces a new concept called Rationalizable Information Equilibria (RIE) which focuses on how rational individuals in a market can use their reasoning abilities to infer information from others. This concept refines the traditional idea of Rational Expectations Equilibria (REE) by showing that when people trade goods with each other, they are generally using RIE. This means that in a market where everyone is trying to maximize their own benefits, they can still make informed decisions based on what others are doing.