Strict fairness of equilibria in asymmetric information economies and mixed markets

Chiara Donnini () and Marialaura Pesce
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Chiara Donnini: Università degli Studi di Napoli Parthenope

Economic Theory, 2020, vol. 69, issue 1, No 3, 107-124

Abstract: Abstract We investigate the fairness property of equal-division competitive market equilibria (CME) in asymmetric information economies with a space of agents that may contain non-negligible (large) traders. We first propose an extension to our framework of the notion of strict fairness due to Zhou (J Econ Theory 57:158–175, 1992). We prove that once agents are asymmetrically informed, any equal-division CME allocation is strictly fair, but a strictly fair allocation might not be supported by an equilibrium price. Then, we investigate the role of large traders and we provide two sufficient conditions under which, in the case of complete information economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.

Keywords: Strict fairness; Envy-freeness; Efficiency; Asymmetric information; Mixed markets (search for similar items in EconPapers)
JEL-codes: D51 D82 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s00199-018-1158-0

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