Contracts for uncertain delivery

Joao Correia-da-Silva and Carlos Hervés-Beloso

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: We propose the notion of objects of choice as uncertain consumption bundles, extending the formulation of Arrow (1953). Agents sign “contracts for uncertain delivery”, which specify a list of alternative bundles, instead of a single one. This allows us to incorporate uncertainty and asymmetric information in the model of Arrow-Debreu. Relatively to the model of Radner (1968), efficiency of trade is increased and some “no trade” situations are avoided, while the classical results still hold: existence of core and competitive equilibrium, core convergence, welfare theorems, etc.

Keywords: Uncertainty; Asymmetric information; Private information; Contingent delivery; Radner equilibrium. (search for similar items in EconPapers)
JEL-codes: C62 D51 D82 (search for similar items in EconPapers)
Pages: 28 pages.
Date: 2005-02
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:165

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