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Correia-da-Silva, João; Hervés-Beloso, Carlos

Prudent expectations equilibrium in economies with uncertain delivery. (English) Zbl 1156.91415

Econ. Theory 39, No. 1, 67-92 (2009).
Summary: In an economy with private information, we introduce the notion of objects of choice as lists of bundles out of which the market selects one for delivery. This leads to an extension of the model of Arrow-Debreu that is used to study trade ex ante with private state verification. Under the assumption that agents are prudent, equilibrium is characterized by the fact that agents consume bundles with the same utility in states that they do not distinguish. This is a weaker condition than the restriction of equal consumption imposed by R. Radner [Econometrica 36, 31–58 (1968; Zbl 0167.18601)], therefore, some no trade situations are avoided and the efficiency of trade increases.

Cited in 25 Documents

MSC:

91B50 General equilibrium theory
91B44 Economics of information
91B40 Labor market, contracts (MSC2010)

Keywords:

general equilibrium; private information; Radner equilibrium; differential information; incomplete information; Knightian uncertainty, amiguity; incomplete contracts; uncertain delivery; lists of bundles

Citations:

Zbl 0167.18601
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Full Text: DOI

References:

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