  Standard rational expectations models with an occasionally binding zero lower
bound constraint either admit no solutions (incoherence) or multiple solutions
(incompleteness). This paper shows that deviations from full-information
rational expectations mitigate concerns about incoherence and incompleteness.
Models with no rational expectations equilibria admit self-confirming
equilibria involving the use of simple mis-specified forecasting models.
Completeness and coherence is restored if expectations are adaptive or if
agents are less forward-looking due to some information or behavioral friction.
In the case of incompleteness, the E-stability criterion selects an
equilibrium.

General Economics;Economics