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The existence and efficiency of general equilibrium with incomplete markets under Knightian uncertainty

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  • Ma, Wei

Abstract

This paper first establishes the existence of equilibrium for an economy with Knightian uncertainty and incomplete markets, and then demonstrates the constrained Pareto efficiency of the equilibrium when there is one commodity only in each state of nature.

Suggested Citation

  • Ma, Wei, 2015. "The existence and efficiency of general equilibrium with incomplete markets under Knightian uncertainty," Economics Letters, Elsevier, vol. 134(C), pages 78-81.
    • Handle: RePEc:eee:ecolet:v:134:y:2015:i:c:p:78-81
    DOI: 10.1016/j.econlet.2015.06.013
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    References listed on IDEAS

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    1. Gale, D. & Mas-Colell, A., 1975. "An equilibrium existence theorem for a general model without ordered preferences," Journal of Mathematical Economics, Elsevier, vol. 2(1), pages 9-15, March.
    2. Luca Rigotti & Chris Shannon, 2005. "Uncertainty and Risk in Financial Markets," Econometrica, Econometric Society, vol. 73(1), pages 203-243, January.
    3. Hart, Oliver D., 1975. "On the optimality of equilibrium when the market structure is incomplete," Journal of Economic Theory, Elsevier, vol. 11(3), pages 418-443, December.
    4. Geanakoplos, John, 1990. "An introduction to general equilibrium with incomplete asset markets," Journal of Mathematical Economics, Elsevier, vol. 19(1-2), pages 1-38.
    5. Radner, Roy, 1972. "Existence of Equilibrium of Plans, Prices, and Price Expectations in a Sequence of Markets," Econometrica, Econometric Society, vol. 40(2), pages 289-303, March.
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    Cited by:

    1. Gerasimou, Georgios, 2018. "On the indifference relation in Bewley preferences," Economics Letters, Elsevier, vol. 164(C), pages 24-26.
    2. Ma, Wei, 2018. "Real indeterminacy of general equilibrium under Knightian uncertainty," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 106-111.
    3. Gerasimou, Georgios, 2018. "On the indifference relation in Bewley preferences," Economics Letters, Elsevier, vol. 164(C), pages 24-26.

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    More about this item

    Keywords

    Knightian uncertainty; Incomplete markets; General equilibrium; Pareto efficiency;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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