Publication Type

Working Paper

Version

publishedVersion

Publication Date

6-2020

Abstract

We study a simple two period economy with no uncertainty and complete markets where agents trade based on forecasts about the second period spot price. We propose as our solution concept a set of forecasts with the following properties: there exist (heterogenous) forecasts contained in this set that lead to efficient allocations, the set contains only those forecasts that correspond to some efficient equilibrium, and Önally that the forecasts assign positive probability to the actual market clearing spot price. We call such a set of prices an efficient equilibrium with ambiguity, and interpret it as a generalization of Radner equilibrium that delivers efficient allocations under forecasts that possess a self-fullling property that is weaker than perfect foresight.

Discipline

Economic Theory | International Economics

Research Areas

Economic Theory

First Page

1

Last Page

17

Publisher

University of Tokyo, Faculty of Economics, Working Paper No. 24

City or Country

Tokyo

Copyright Owner and License

Authors

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