An economy faces an unknown individual risk, such as the health effects of a recently discovered environmental hazard. Opinions may be widely different about the distribution of risks across the population. We study financial markets that suffice to reach efficient allocations in this situation....

The present paper draws on recent findings of Chichilnisky and Wu [5] and Cass et al. [4], both of which study resource allocation with individual risks. Both of these papers develop further Malinvaud's [15,16] original formulation of general equilibrium with individual risks, and Arrow's [1]...

An economy faces an unknown individual risk, such as the health effects of a recently discovered environmental hazard. Opinions may be widely different about the distribution of risks across the population. We study financial markets that suffice to reach efficient allocations in this situation....