Sequentially complete markets remain incomplete
AbstractWe reconsider the well-known result of Arrow (1953) that the set of equilibria of an economy with complete markets coincides with the one of an economy with sequentially complete markets. We show by means of two examples that this result is problematic when there exist multiple equilibrium continuations to the initial-period component of an intertemporal equilibrium. Some consequences are drawn.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2003085.
Date of creation: 00 Nov 2003
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sequentially complete markets; rational expectations; time inconsistency;
Other versions of this item:
- DREZE, Jacques H. & HERINGS, Jean-Jacques P., . "Sequentially complete markets remain incomplete," CORE Discussion Papers RP -2034, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Drèze,Jacques H. & Herings,P. Jean-Jacques, 2003. "Sequentially complete Markets Remain Incomplete," Research Memorandum 058, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
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