Economics at your fingertips  

Coarse Competitive Equilibrium and Extreme Prices

Faruk Gul, Wolfgang Pesendorfer and Tomasz Strzalecki ()

American Economic Review, 2017, vol. 107, issue 1, 109-37

Abstract: We introduce a notion of coarse competitive equilibrium, to study agents' inability to tailor their consumption to prices. Our goal is to incorporate limited cognitive ability (in particular limited attention, memory, and complexity) into the analysis of competitive equilibrium. Compared to standard competitive equilibrium, our concept yields more extreme prices and, when all agents have the same endowment, riskier allocations. We provide a tractable model suitable for general equilibrium analysis as well as asset pricing.

JEL-codes: D11 D51 D91 G10 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20141287
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link) (application/pdf) ... icdMQwrjng928F_d-3w9 (application/zip) ... gRsKBWW2hHqWi5nvzQLM (application/pdf) ... 7fixW4L3UtOo4yXn56bR (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Coarse Competitive Equilibrium and Extreme Prices (2014)
Working Paper: Coarse Competitive Equilibrium and Extreme Prices Downloads
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:

Ordering information: This journal article can be ordered from

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

Page updated 2019-02-09
Handle: RePEc:aea:aecrev:v:107:y:2017:i:1:p:109-37