New Equilibrium Theory Reveals Potential for Sustained Deflation and Complexity
The article introduces a new way to understand how people predict prices in the economy. Instead of needing to know the exact price, they just have to think it's possible. This new idea shows that prices can be uncertain and change even when people are not very risk-averse. It also shows that prices can go down over time and still be considered a valid prediction. This is different from the usual idea that prices stay the same.