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Prudent Expectations Equilibrium in Economies with Uncertain Delivery

Joao Correia-da-Silva () and Carlos Hervés-Beloso ()

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

Abstract: In an economy with private information, we introduce the notion of objects of choice as lists of bundles out of which the market selects one for delivery. This leads to an extension of the model of Arrow-Debreu that is used to study ex-ante trade with private state verification. The model does not require agents to have complete information about the space of states, being suited to a context of Knightian uncertainty. Under the assumption that agents are prudent, equilibrium is characterized by the fact that agents consume bundles with the same utility in states that they do not distinguish.

Keywords: General equilibrium; Private information; Incomplete information; Knightian uncertainty; Ambiguity; Uncertain delivery; Lists of bundles. (search for similar items in EconPapers)
JEL-codes: C62 D51 D82 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2006-06
New Economics Papers: this item is included in nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

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Related works:
Journal Article: Prudent expectations equilibrium in economies with uncertain delivery (2009) Downloads
Working Paper: Prudent Expectations Equilibrium in Economies with Uncertain Delivery (2006) Downloads
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