In McLean and Postlewaite (2001), we analyzed a general equilibrium model with asymetrically informed agents. We presented a notion of informational size and showed (among other things) that when agents' information as a whole resolved nearly all the uncertainty, the conflict between incentive...

I extend the classical general equilibrium treatment of uncertainty about exogenous states of nature to uncertainty about prices. Traders do not know the prices at which markets will clear but have expectations over possible prices. They trade price-contingent securities (derivatives) to insure...

I extend the classical general equilibrium treatment of uncertainty about exogenous states of nature to uncertainty about prices. Traders do not know the prices at which markets will clear but have expectations over possible prices. They trade price-contingent securities (derivatives) to insure...