Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy

Eisei Ohtaki

Economics Bulletin, 2010, vol. 30, issue 2, 961-966

Abstract: It is well-known that in the static Arrow-Debreu economy with complete markets, extrinsic uncertainty cannot matter. This paper re-examines this result when agents preferences exhibit aversion to Knightian uncertainty. We then show that extrinsic uncertainty still cannot matter.

Keywords: Extrinsic uncertainty; Knightian uncertainty; Arrow-Debreu economy; Rational expectations equilibrium. (search for similar items in EconPapers)
JEL-codes: D5 E2 (search for similar items in EconPapers)
Date: 2010-04-01
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