IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-00607668.html

Equilibrium Selections

Author

Listed:
  • Heracles M. Polemarchakis

    (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain = Catholic University of Louvain)

  • Beth Allen
  • Jayasri Dutta

Abstract

This paper analyses the impact of multiple competitive equilibria and complete markets in a simple general equilibrium model. A random selection from the equilibrium correspondence of a finite exchange economy defines probability distributions on equilibrium prices. Asset markets allow traders to insure against the resulting uncertainty. If asset markets are complete, equilibrium selections are necessarily degenerate. The selection cannot be non- trivially random, and must assign probability one to particular equilibrium price vectors. In this case, asset prices reveal the choice of equilibrium price vectors and achieve the coordination of traders' expectations. If the asset market is incomplete, equilibrium selections can be non-degenerate, so that price uncertainty is self-fulfilling. A fully insured random selection defines an iterative procedure of reallocations which is Pareto improving at each step. The process converges to a Pareto optimum in finitely many steps. The key requirement is that the random selection be continuous, which is a generic condition for smooth exchange economies with strictly concave utility functions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Heracles M. Polemarchakis & Beth Allen & Jayasri Dutta, 1994. "Equilibrium Selections," Working Papers hal-00607668, HAL.
    • Handle: RePEc:hal:wpaper:hal-00607668
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Ghosal, Sayantan & Morelli, Massimo, 2004. "Retrading in market games," Journal of Economic Theory, Elsevier, vol. 115(1), pages 151-181, March.
    3. Hector Calvo-Pardo, 2009. "Are the antiglobalists right? Gains-from-trade without a Walrasian auctioneer," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(3), pages 561-592, March.
    4. Dutta, Jayasri & Morris, Stephen, 1997. "The Revelation of Information and Self-Fulfilling Beliefs," Journal of Economic Theory, Elsevier, vol. 73(1), pages 231-244, March.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-00607668. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.