Genericity with Infinitely Many Parameters

Anderson Robert M. and William Zame
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Anderson Robert M.: UC Berkeley, anderson@econ.berkeley.edu

The B.E. Journal of Theoretical Economics, 2001, vol. 1, issue 1, 64

Abstract: Genericity analysis is widely used to show that desirable properties that fail in certain "knife-edge" economic situations nonetheless obtain in "typical" situations. For finite-dimensional spaces of parameters, the usual notion of genericity is full Lebesgue measure. For infinite dimensional spaces of parameters (for instance, the space of preferences on a finite-dimensional commodity space, no analogue of Lebesgue measure is available; the lack of such an analogue has prompted the use of less compelling topological notions of genericity. Christensen (1974) and Hunt, Sauer and Yorke (1992) have proposed a measure-theoretic notion of genericity, which Hunt, Sauer and Yorke call prevalence, which coincides with full Lebesgue measure in Euclidean space and which extends to infinite-dimensional vector spaces. This notion is not directly applicable in most economic settings because the relevant parameter sets are small subsets of vector spaces -- especially cones or order intervals -- not vector spaces themselves. We adapt the notion to economically relevant environments by defining two notions of prevalence relative to a convex set in a topological vector space. The first notion is very easy to understand and apply, and has all of the properties one would desire except that it is not closed under countable unions; the second notion contains the first and has all the good properties of the first notion except simplicity; it is closed under countable unions. We provide four economic applications: 1) generic existence of equilibrium in financial models, 2) generic finiteness of the number of pure strategy Nash equilibria and Pareto inefficiency of "non-vertex" Nash equilibria for games with a continuum of actions and smooth payoffs, 3) generic regularity of exchange economies when some agents are constrained to have 0 endowment of some goods, 4) generic single-valuedness of the core of transferable utility games.

Keywords: genericity; prevalence; shyness; finance; Consumption-Based Capital Asset Pricing Model; regular economies; comparative statics; Nash equilibrium (search for similar items in EconPapers)
Date: 2001
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DOI: 10.2202/1534-5963.1003

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