Joao Correia-da-Silva () (CEMPRE, Faculdade de Economia, Universidade do Porto) Carlos Hervés-Beloso () (RGEA. Facultad de Económicas. Universidade de Vigo.)
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In an economy with private information, we introduce the notion of objects of choice as lists of bundles out of which the market selects one for delivery. This leads to an extension of the model of Arrow-Debreu that is used to study ex-ante trade with private state verification. The model does not require agents to have complete information about the space of states, being suited to a context of Knightian uncertainty. Under the assumption that agents are prudent, equilibrium is characterized by the fact that agents consume bundles with the same utility in states that they do not distinguish.
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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number
216.
Find related papers by JEL classification: C62 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - 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
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