A remark on the supposed equivalence between complete markets and perfect foresight hypothesis

Saverio Fratini and Enrico Levrero

MPRA Paper from University Library of Munich, Germany

Abstract: We consider a sequential equilibrium model over two periods, during the first of which agents have perfect information and their expectations are formed as if there were complete future markets. We show that, in the second period, equilibrium prices may well be different from those expected, without any unexpected change having occurred. This result highlights a lack of correspondence between the perfect foresight hypothesis and that of complete markets.

Keywords: Arrow-Debreu equilibrium; Complete markets; Sequential equilibrium; Perfect foresight; Indeterminacy (search for similar items in EconPapers)
JEL-codes: D46 D51 D84 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/15988/1/MPRA_paper_15988.pdf original version (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:pra:mprapa:15988

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().