Prudent expectations equilibrium in economies with uncertain delivery

• Type: Article in International Scientific Journal
• Date: 2009

Authors

João Correia-da-Silva (Author) FEP; Carlos Hervés-Beloso (Author) FEP

Journal

Title: Economic Theory

Vol. 39

Pages: 67-92

ISSN: 0938-2259

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 23 Citations

ISI Web of Science

Scopus - 27 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-003-M0T

DOI: 10.1007/s00199-007-0316-6

Abstract (EN): 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 Radner (Econometrica 36(1), 31-58, 1968), therefore, some no trade situations are avoided and the efficiency of trade increases.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 26