We construct a simple trading process that is based on the maximization, at each stage, of the total distributable surplus. We show that this process converges to a Pareto optimal allocation.

We present a consistent pure-exchange general equilibrium model where agents may not be able to foresee all possible future contingencies. In this context, even with nominal assets and complete asset markets, an equilibrium may not exist without appropriate assumptions. Specific examples are...

We show, in the Choquet expected utility model, that preference for diversification, that is, convex preferences, is equivalent to a concave utility index and a convex capacity. We then introduce a weaker notion of diversification, namely "sure diversification." We show that this implies that...

In a two-period sunspot economy with inside money and "S" possible realizations of the sunspot, we prove that, generically in the space of utility functions, there are ["S" - 1] degrees of real indeterminacy. This result generalizes the previously known result for sunspot models that,...

This paper analyzes through a simple two-period model the fact that, if some agents hold inside money intertemporally, the second-period "normalization" matters. Thus, there are several equilibria of the second-period economy, indexed by the level of inflation. A concept of equilibrium...

This paper analyzes through a simple two-period model the fact that, if some agents hold inside money intertemporally, the second-period "normalization" matters. Thus, there are several equilibria of the second-period economy, indexed by the level of inflation. A concept of equilibrium...

In a multiple priors model á la Gilboa and Schmeidler (1989), we provide necessary and sufficient behavioral conditions ensuring the countable additivity and non-atomicity of all priors. Copyright Springer-Verlag Berlin/Heidelberg 2005

Following the seminal works of Schmeidler (1989), Gilboa and Schmeidler (1989), roughly put, an agent’s subjective beliefs are said to be ambiguous if the beliefs may not be represented by a unique probability distribution, in the standard Bayesian fashion, but instead by a set of...