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Introduction to Sunspots and Lotteries

  • Prescott, Edward

    (U of Minnesota and Federal Reserve Bank of Minneapolis)

  • Shell, Karl

    (Cornell U)

This introduces the symposium on sunspots and lotteries. Two stochastic general equilibrium concepts, Sunspot Equilibrium (SE) and Lottery Equilibrium (LE), are compared. It is shown that, for some general, pure-exchange economies which allow for consumption non-convexities or moral hazards, the set of LE allocations is equivalent to the set of SE allocations provided that the randomizing device can generate events of any probability.

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File URL: https://cae.economics.cornell.edu/psjetintro200208241.pdf
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Paper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number 02-08.

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Date of creation: Aug 2002
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Handle: RePEc:ecl:corcae:02-08
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  22. Edward Simpson Prescott, 1999. "A primer on moral-hazard models," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 47-78.
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