Impossibility of Risk Sharing in an Economy with Asymmetric Information
In asset economies with uncertainty where agents have asymmetric information concerning the realization of the state of the economy, it is shown that, if information is independent across agents, there cannot exist any mechanism that provides feasible, individually rational and incentive compatible outcomes and the resulting allocation is the no-trade one.
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Volume (Year): 7 (2004)
Issue (Month): 1 (Summer)
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