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Contracts for uncertain delivery

Author

Listed:
  • João Correia-da-Silva

    (FCT. Faculdade de Economia. Universidade do Porto.)

  • Carlos Hervés-Beloso

    (RGEA. Facultad de Económicas. Universidad de Vigo.)

Abstract

We propose the notion of objects of choice as uncertain consumption bundles, extending the formulation of Arrow (1953). Agents sign “contracts for uncertain delivery”, which specify a list of alternative bundles, instead of a single one. This allows us to incorporate uncertainty and asymmetric information in the model of Arrow-Debreu. Relatively to the model of Radner (1968), efficiency of trade is increased and some “no trade” situations are avoided, while the classical results still hold: existence of core and competitive equilibrium, core convergence, welfare theorems, etc.

Suggested Citation

  • João Correia-da-Silva & Carlos Hervés-Beloso, 2005. "Contracts for uncertain delivery," FEP Working Papers 165, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:165
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    More about this item

    Keywords

    Uncertainty; Asymmetric information; Private information; Contingent delivery; Radner equilibrium.;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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