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Undescribable Events

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Author Info
NABIL I. AL-NAJJAR
LUCA ANDERLINI
LEONARDO FELLI

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Abstract

We develop a model of undescribable events. Examples of events that are well understood by economic agents but are prohibitively difficult to describe in advance abound in real life. This notion has also pervaded a substantial amount of economic literature. Undescribable events in our model are understood by economic agents-their consequences and probabilities are known-but are such that every finite description of such events necessarily leaves out relevant features that have a non-negligible impact on the parties' expected utilities. We illustrate our results using a simple coinsurance problem as a backdrop. When the only uncertainty faced by the two agents is an undescribable event the optimal finite coinsurance contract is no contract at all. Copyright 2006 The Review of Economic Studies Limited.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2006.00399.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 73 (2006)
Issue (Month): 4 (October)
Pages: 849-868
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Handle: RePEc:bla:restud:v:73:y:2006:i:4:p:849-868

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527

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  1. Luca Anderlini & Leonardo Felli & Andrew Postlewaite, 2001. "Courts of Law and Unforeseen Contingencies," PIER Working Paper Archive 06-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Jan 2006. [Downloadable!]
    Other versions:
  2. Kumabe, Masahiro & Mihara, H. Reiju, 2007. "Computability of simple games: A complete investigation of the sixty-four possibilities," MPRA Paper 440, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-22.

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