The perfect foresights' assumption revisited: (I) the existence of equilibrium with multiple price expectations

Lionel de Boisdeffre ()
Additional contact information
Lionel de Boisdeffre: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Our earlier papers had extend to asymmetric information the classical existence theorems of general equilibrium theory, under the standard assumption that agents had perfect foresights, that is, they knew, ex ante, which price would prevail on each spot market. Common observation suggests, however, that agents more often trade with an un-precise knowledge of future prices. We now let agents anticipate, in each random state, a set of plausible prices, called expectations, endowed with a probability distribution. These expectations are assumed to define a so-called "structure of beliefs", along which agents' expectations sets intersect on each spot market. We introduce a related concept of "correct foresights equilibrium" (CFE), in which equilibrium prices belong to all agents expectations sets. We prove that the existence of a CFE is still characterized by the no-arbitrage condition of finance. This result, which extends our earlier theorems, shows that private information or price uncertainty would not affect the existence but only the value of equilibrium prices and allocations.

Keywords: asymmetric information; General equilibrium; incomplete markets; existence of equilibrium; Equilibre général; marchés incomplets; existence de l'équilibre; asymétrie d'information (search for similar items in EconPapers)
Date: 2008-12
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00354814
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in 2008

Downloads: (external link)
https://shs.hal.science/halshs-00354814/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00354814

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().