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Borch’s theorem, equal margins, and efficient allocation

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  • Flåm, Sjur Didrik

Abstract

The economic concept of margin guides or justifies the sharing of risks and resources. Broadly, by Borch’s theorem, competing claimants, ends or users ought see equal margins along any efficient allocation.

Suggested Citation

  • Flåm, Sjur Didrik, 2016. "Borch’s theorem, equal margins, and efficient allocation," Insurance: Mathematics and Economics, Elsevier, vol. 70(C), pages 162-168.
    • Handle: RePEc:eee:insuma:v:70:y:2016:i:c:p:162-168
    DOI: 10.1016/j.insmatheco.2016.06.010
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    References listed on IDEAS

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    1. Sjur Didrik Flåm & Kjetil Gramstad, 2012. "Direct Exchange In Linear Economies," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 1-18.
    2. Edmond Malinvaud, 1974. "The Allocation of Individual Risks in Large Markets," International Economic Association Series, in: Jacques H. Drèze (ed.), Allocation under Uncertainty: Equilibrium and Optimality, chapter 8, pages 110-125, Palgrave Macmillan.
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    6. Blazenko, George, 1985. "The Design of an Optimal Insurance Policy: Note," American Economic Review, American Economic Association, vol. 75(1), pages 253-255, March.
    7. Flam, Sjur & Owen, Guillermo & Saboya, Martha, 2005. "The not-quite non-atomic game: Non-emptiness of the core in large production games," Mathematical Social Sciences, Elsevier, vol. 50(3), pages 279-297, November.
    8. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    9. Hara, Chiaki & Huang, James & Kuzmics, Christoph, 2007. "Representative consumer's risk aversion and efficient risk-sharing rules," Journal of Economic Theory, Elsevier, vol. 137(1), pages 652-672, November.
    10. Hayne E. Leland, 1978. "Optimal Risk Sharing and the Leasing of Natural Resources, with Application to Oil and Gas Leasing on the OCS," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(3), pages 413-437.
    11. Flåm, Sjur Didrik & Gramstad, Kjetil, 2012. "Direct Exchange in Linear Economies," Working Papers in Economics 05/12, University of Bergen, Department of Economics.
    12. Malinvaud, E, 1973. "Markets for an Exchange Economy with Individual Risks," Econometrica, Econometric Society, vol. 41(3), pages 383-410, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Borch’s theorem; Efficient allocation; Generalized differentials; Core; Competitive equilibrium; Insurance with deductibles;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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