Coarse Competitive Equilibrium and Extreme Prices
We introduce a notion of coarse competitive equilibrium (CCE), to study agents' inability to tailor their consumption to the state of the economy. Our notion is motivated by limited cognitive ability (in particular attention, memory, and complexity) and it maintains the complete market structure of competitive equilibrium. Compared to standard competitive equilibrium, our concept yields riskier allocations and more extreme prices. We provide a tractable model that is suitable for general equilibrium analysis as well as asset pricing.
|Date of creation:|
|Contact details of provider:|| Postal: 1737 Cambridge Street, Cambridge, MA 02138|
Web page: http://scholar.harvard.edu
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:qsh:wpaper:8365. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Brandon)
If references are entirely missing, you can add them using this form.