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Sequentially complete markets remain incomplete

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  • Drèze, Jacques H.
  • Herings, P. Jean-Jacques

Abstract

We show by means of an example that the result of Arrow [Arrow, K.J. (1953), Le rôle des valeurs boursières pour la répartition la meilleure des risques, Econométrie, 41-47, CNRS, Paris; translated as The role of securities in the optimal allocation of risk bearing, Review of Economic Studies, 31, 91-96] is problematic when there exist multiple equilibrium continuations to the initial-period component of an intertemporal equilibrium.

Suggested Citation

  • Drèze, Jacques H. & Herings, P. Jean-Jacques, 2008. "Sequentially complete markets remain incomplete," Economics Letters, Elsevier, vol. 100(3), pages 445-447, September.
    • Handle: RePEc:eee:ecolet:v:100:y:2008:i:3:p:445-447
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    Cited by:

    1. Bottazzi, Giulio & Dindo, Pietro, 2014. "Evolution and market behavior with endogenous investment rules," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 121-146.
    2. P. Herings & Kirsten Rohde, 2008. "On the completeness of complete markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 171-201, November.
    3. Robin Pope & Reinhard Selten & Johannes Kaiser & Sebastian Kube & Jürgen Hagen, 2012. "Exchange rate determination: a theory of the decisive role of central bank cooperation and conflict," International Economics and Economic Policy, Springer, vol. 9(1), pages 13-51, March.
    4. P. Herings & Kirsten Rohde, 2008. "On the completeness of complete markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 171-201, November.
    5. Fratini, Saverio M. & Levrero, Enrico Sergio & Ravagnani, Fabio, 2016. "Price expectations in neo-Walrasian equilibrium models: an overview," MPRA Paper 69515, University Library of Munich, Germany.
    6. Robin Pope, 2009. "Beggar‐Thy‐Neighbour Exchange Rate Regime Misadvice from Misapplications of Mundell (1961) and the Remedy," The World Economy, Wiley Blackwell, vol. 32(2), pages 326-350, February.

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    More about this item

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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