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Beliefs and Pareto Efficient Sets: A Remark

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  • Thibault Gajdos

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Marc Tallon

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We show that, in a two-period economy with uncertainty in the second period, if an allocation is Pareto optimal for a given set of beliefs and remains optimal when these beliefs are changed, then the set of optimal allocations of the two economies must actually coincide. We identify equivalence classes of beliefs giving rise to the same set of Pareto optimal allocations.

Suggested Citation

  • Thibault Gajdos & Jean-Marc Tallon, 2002. "Beliefs and Pareto Efficient Sets: A Remark," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00085912, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00085912
    DOI: 10.1006/jeth.2001.2899
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00085912
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    References listed on IDEAS

    as
    1. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    2. Cass, David & Chichilnisky, Graciela & Wu, Ho-Mou, 1996. "Individual Risk and Mutual Insurance," Econometrica, Econometric Society, vol. 64(2), pages 333-341, March.
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    Keywords

    Beliefs; Pareto Optimality;

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