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Rational Expectation Can Preclude Trades


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  • Matsuhisa, Takashi
  • Ishikawa, Ryuichiro


We consider a pure exchange economy under uncertainty in which the traders have the non-partition structure of information. They willing to trade the amounts of state-contingent commodities and they know their own expectations. Common knowledge of these conditions among all the traders can preclude trade if the initial endowments allocation is ex-ante Pareto optimal. Furthermore we introduce rational expectations equilibrium under the non-partition information, and prove the existence theorem and the fundamental theorems of welfare economics.

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Bibliographic Info

Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2002-01.

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Length: 28 p.
Date of creation: Nov 2003
Date of revision:
Handle: RePEc:hit:econdp:2002-01

Note: April, 2002; Revised: November, 2003
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Related research

Keywords: Economy with knowledge; Rational expectations equilibrium; No trade theorem; Ex-ante Pareto optimum; Common-knowledge;

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