A note on the convergence to competitive equilibria in economies with moral hazard
We examine the conditions under which competitive equilibria can be obtained as the limit, when the number of strategic traders gets large, of Nash equilibria in economies with asymmetric information on agents' effort and possibly imperfect observability of agents' trades. Convergence always occur when either effort is publicly observed (no matter what is the information available to intermediaries on agents' trades); or effort is private information but agents' trades are perfectly observed; or no information at all is available on agents' trades. On the other hand, when each intermediary can observe its trades with an agent, but not the agent's trades with other intermediaries, the (Nash) equilibria with strategic intermediaries do not converge to any of the competitive equilibria, for an open set of economies. The source of the difficulties for convergence is the combination of asymmetric information and the restrictions on the observability of trades which prevent the formation of exclusive contractual relationships and generate barriers to entry in the markets for contracts.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
| Length: | |
| Date of creation: | Dec 1998 |
| Date of revision: | |
| Handle: | RePEc:upf:upfgen:381 |
| Contact details of provider: | Web page: http://www.econ.upf.edu/
|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bisin, Alberto & Gottardi, Piero, 1999.
"Competitive Equilibria with Asymmetric Information,"
Journal of Economic Theory,
Elsevier, vol. 87(1), pages 1-48, July.
- Alberto Bisin & Piero Gottardi, 1998. "Competitive Equilibria with Asymmetric Information," Levine's Working Paper Archive 2062, David K. Levine.
- Douglas Gale, 1992. "A Walrasian Theory of Markets with Adverse Selection," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 229-255.
- Bisin, A. & Geanakoplos, J.D. & Gottardi, P. & Minelli, E. & Polemarchakis, H., 2011.
"Markets and contracts,"
Journal of Mathematical Economics,
Elsevier, vol. 47(3), pages 279-288.
- Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Herakles Polemarchakis, 2010. "Markets and contracts," Economics Working Papers ECO2010/29, European University Institute.
- Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Heracles Polemarchakis, 2009. "Markets and Contracts," Working Papers 0915, University of Brescia, Department of Economics.
- Pradeep Dubey & John Geanakoplos & Martin Shubik, 1988. "Default and Efficiency in a General Equilibrium Model with Incomplete Markets," Cowles Foundation Discussion Papers 879R, Cowles Foundation for Research in Economics, Yale University, revised Feb 1989.
- Bruno Biais & David Martimort & Jean-Charles Rochet, 2000.
"Competing Mechanisms in a Common Value Environment,"
Econometrica,
Econometric Society, vol. 68(4), pages 799-838, July.
- Biais, Bruno & Martimort, David & Rochet, Jean-Charles, 1998. "Competing Mechanisms in a Commun Value Environment," IDEI Working Papers 75, Institut d'Économie Industrielle (IDEI), Toulouse.
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.
When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:381. 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: ()
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.