The social value of information in economies with mandatory savings

Pablo Beker and Conrado Cuevas

No 269080, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We study the value of public information in a stochastic exchange economy where agents trade assets to reallocate risk and mandatory (retirement) savings imposes a lower bound on the market value of some agents’ holdings of a financial asset. Since equilibrium prices depend on the agents’ beliefs about the states of nature, the arrival of information shifts the agents’ mandatory savings constraints. We show that the arrival of public information can generate an ex-ante Pareto improvement relative to an uninformative equilibrium even when ex-post improvements are not possible.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 38
Date: 2018-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269080

DOI: 10.22004/ag.econ.269080

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