In this paper I analyze the effect of market uncertainty in an overlapping generations economy with strategic interactions
among agents. I demonstrate the existence of sunspot-like equilibria, in which arbitrarily small amounts of intrinsic uncertainty
in agents’ offers generate large fluctuations in equilibrium bids and prices.
Keywords Sunspots - Strategic interaction
JEL Classification Numbers C72 - C73 - D51 - L16
I would like to express my gratitude to Stephen Spear for his guidance during the realization of this project. I thank an
anonymous referee for providing insightful comments and suggestions. I have benefited from comments by Alexander Elbittar,
Cesar Guerrero, and Vivek Ramachandran.