E.g. When Grazzini et al. (2014) discuss a "monopolistically competitive outcome" (MC) in their paper ($2.1), which is based on Dixit-Stiglitz's model, 1977, does this outcome involve assuming rational expectations in their model? They don't discuss rational expectations explicitly, but they do discuss evidence for heterogeneous expectations, which lead nevertheless to both quantity and price converge towards the MC equilibrium, which acts as a benchmark to compare their behavioural model and experimental data

I wonder how close this type of behaviour of firms resembles rational expectations, although the term is probably never used in this context. However, the main idea behind rational expectations is basically using all available information optimally, often accompanied by a full information assumption. I guess both apply to the Dixit Stiglitz model?

Grazzini, J., Massaro, D., Assenza, T., Grazzini, J., & Massaro, D. (2014). Dipartimento di Economia e Finanza PQ Strategies in Monopolistic Competition : Some Insights from the Lab. March.



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