Decentralizability of efficient allocations with heterogenous forecasts

Shurojit Chatterji and Atsushi Kajii
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Shurojit Chatterji: Singapore Management University

No 16, Working Papers on Central Bank Communication from University of Tokyo, Graduate School of Economics

Abstract: Do price forecasts of rational economic agents need to coincide in perfectly competitive complete markets in order for markets to allocate resources efficiently? To address this question, we define an efficient temporary equilibrium (ETE) within the framework of a two period economy. Although an ETE allocation is intertemporally efficient and is obtained by perfect competition, it can arise without the agents forecasts being coordinated on a perfect foresight price. We show that there is a one dimensional set of such Pareto efficient allocations for generic endowments.

JEL-codes: D51 D53 D61 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2020-02
New Economics Papers: this item is included in nep-sea
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Related works:
Journal Article: Decentralizability of efficient allocations with heterogeneous forecasts (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:upd:utmpwp:016

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